Midstates Petroleum Co. Inc. and Midstates Petroleum Company LLC have filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas. The Chapter 11 filing will facilitate a pre-arranged restructuring of the company's consolidated balance sheet through a reorganization plan.
The company has entered into a Plan Support Agreement (PSA) with its lenders under the company's reserve-based revolving credit facility representing approximately 80% in principal amount of its first lien debt, along with certain other creditors holding approximately 74% in principal amount of the company's second lien debt and approximately 77% in principal amount of the company's third lien debt. Among other things, the PSA contemplates (i) the permanent pay-down of $82 million of the company's first lien debt and a $170 million credit facility upon emergence, in the form of either a reserve-based revolving credit facility, a term loan, or a combination thereof, (ii) the pay-down of up to $60 million of the company's second lien debt, and (iii) the conversion into equity of all of the Company's remaining debt junior to the first lien debt.
"While our premier Mississippian Lime assets can achieve solid rates of return in the current price environment, our highly leveraged balance sheet has severely limited our ability to sustain our operations during an extended period of low prices,” said Jake Brace, president and CEO.
Brace said the company plans to operate business as usual throughout the process and “will complete our reorganization as quickly and cost effectively as possible.”
The Tulsa, OK-based company’s operations are focused on oilfields in the Mississippian Lime play in Oklahoma and the Anadarko Basin in Texas and Oklahoma.