Saratoga Resources, Inc. Files Voluntary Petitions for Protection under Chapter 11; Operations to Continue During Reorganization
Saratoga Resources, Inc. (NYSE MKT: SARA; the “Company” or “Saratoga”)
today announced the filing of voluntary Chapter 11 petitions for itself
and certain operating subsidiaries in the U.S. Bankruptcy Court for the
Western District of Louisiana in Lafayette.
Saratoga intends to continue to operate its business and manage its
properties as debtors in possession. At this time, Saratoga believes it
has sufficient cash to operate its businesses in the immediate term
without need for debtor-in-possession financing.
Today’s bankruptcy filing follows earlier challenges relating to the
Company’s field operations coupled with the precipitous decline in oil
and gas prices which resulted in lower than projected revenues and
profitability and an unexpected arbitration award against the Company.
Exhaustive initiatives have been undertaken in the Company’s field
operations, remedying many of the earlier operating issues, and an
ongoing cost containment program is bringing down operating costs to
address the lower commodity price environment. Production optimization
initiatives and infrastructure improvements undertaken during the last
twelve months have addressed the principal causes of decreased run
times, gas lift gas shortages, mechanical issues and flow line capacity
constraints.
Thomas F. Cooke, Saratoga’s Chairman and Chief Executive Officer, said
“As a result of the steep decline in commodity prices during the second
half of 2014 and continuing into 2015, compounded by production declines
associated with run time issues in early 2014, which have subsequently
been addressed, we have been operating in a cash constrained environment
and have undertaken strategic initiatives to address operations in the
current climate, including entering into forbearance agreements with our
principal lenders and undertaking an extensive, cost-cutting program
with targeted LOE and G&A savings of more than $13 million for 2015
compared to 2014. We have been working closely with our secured lenders
to try to address liquidity issues with a view to either restructure or
repay existing debt and preserve collateral from hostile action arising
from the outstanding arbitration award and have retained advisors to
assist in the evaluation of potential alternatives to either restructure
or repay the existing secured debt. We have also engaged in discussions
with Harvest Operating, the holder of the adverse arbitration award
totaling $3.7 million, and are pursuing separate legal claims against
Harvest Operating which may ultimately offset, in part or in whole, the
arbitration award. Without an acceptable resolution of the arbitration
award, our management and our principal lenders determined that a court
administered reorganization would offer the best means of addressing the
arbitration claim and the company’s existing debt structure and
realizing the anticipated benefits of our drilling, workover and
recompletion program.”
“We hope to use the Chapter 11 process to avert adverse action by
Harvest Operating while still permitting us to pursue our legal claims
against Harvest Operating as well as to arrive at a satisfactory
restructuring or retirement of our existing secured debt while
continuing to develop our holdings, grow our production and revenues and
reduce our operating expenses,” Mr. Cooke said. “We appreciate the
support of our employees, vendors, business associates and stockholders.
We want to assure them that we intend to continue doing business while
we complete the processes before us and expect that a vast majority of
our suppliers, vendors and business associates will see no disruption in
our business. We believe that our long-term prospects remain solid, that
we continue to have substantial untapped reserves and that our
development program will continue to increase daily production. The
process we have undertaken will better allow us to realize the full
value of our properties for the benefit of both our creditors and our
stockholders and position us to benefit from what we expect is an
inevitable recovery in oil and gas prices.”
Saratoga expects to file its monthly reports to the bankruptcy court
under Form 8-K.
About Saratoga Resources
Saratoga Resources is an independent exploration and production company
with offices in Houston, Texas and Covington, Louisiana. Principal
holdings cover approximately 51,500 gross/net acres, mostly held by
production, located in the transitional coastline and protected in-bay
environment on parish and state leases of south Louisiana and in the
shallow Gulf of Mexico Shelf. Most of the company’s large drilling
inventory has multiple pay objectives that range from as shallow as
1,000 feet to the ultra-deep prospects below 20,000 feet in water depths
ranging from less than 10 feet to a maximum of approximately 80 feet.
For more information, go to Saratoga's website at www.saratogaresources.com
and sign up for regular updates by clicking on the Updates button.
Forward-Looking Statements
This press release includes certain estimates and other forward-looking
statements within the meaning of Section 21E of the Securities Exchange
Act of 1934, including, but not limited to, statements regarding the
Company’s ability to continue to operate its business and to manage its
properties as debtors-in-possession, the sufficiency of cash on hand to
support operations in the intermediate term, the ability of the Company
to operate without debtor-in-possession financing, the ability of the
Company to arrive at a satisfactory arrangement with its creditors, the
ability of the Company to arrive at a satisfactory resolution of the
Harvest Operating arbitration award, the ultimate LOE and G&A cost
savings that may be realized, the ability of the Company to maintain
improved run times and to grow production levels, expected future
increases in oil and gas prices, the ability of the Company to fund
development activities, the ultimate preservation of equity and the
ultimate outcome of the Chapter 11 proceeding. Words such as "expects”,
"anticipates", "intends", "plans", "believes", "assumes", "seeks",
"estimates", "should", and variations of these words and similar
expressions, are intended to identify these forward-looking statements.
While we believe these statements are accurate, forward-looking
statements are inherently uncertain and we cannot assure you that these
expectations will occur and our actual results may be significantly
different. These statements by the Company and its management are based
on estimates, projections, beliefs and assumptions of management and are
not guarantees of future performance. Important factors that could cause
actual results to differ from those in the forward-looking statements
include the factors described in the "Risk Factors" section of the
Company's filings with the Securities and Exchange Commission. The
Company disclaims any obligation to update or revise any forward-looking
statement based on the occurrence of future events, the receipt of new
information, or otherwise.
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