HOUSTON (Reuters) – Failed Oklahoma shale producer Alta Mesa Resources agreed to be purchased for $220 million, nearly a third below a deal struck earlier this year, according to filings in a U.S. bankruptcy court in Houston.
Creditors in January reached a $320 million deal with a joint venture between Houston private-equity firm Bayou City Energy Management and Mach Resources, an Oklahoma oil and gas producer founded by U.S. shale pioneer Tom Ward.
That deal fell apart as oil prices tumbled and the two were unable to close financing from Swiss financial group UBS. The U.S. Bankruptcy Court for the Southern District of Texas authorized creditors to seek new bids last month, according to court filings.
Executives from Bayou City Energy and Mach Resources did not immediately respond to requests for comment.
Oil has tumbled to near a two-decade low as the coronavirus pandemic cut global fuel demand and Saudi Arabia and Russia launched a price war to grab market share. U.S. oil and gas companies are facing huge losses on production, which in some cases costs twice the price offered for their oil. Prices have crashed by two-thirds this year, falling last month to as little as $20 a barrel.
(For a graphic showing the impact of the oil price collapse, please click here: https://reut.rs/39ieums)
The revised Bayou City-Mach Resources bid is “the highest and otherwise best offer,” according to the creditors’ court filing. It is based on U.S. oil selling at $23 a barrel, and can rise or fall by as much as $20 million based on the price of oil two days prior to the closing.
U.S. oil futures on Friday traded at $26.76 a barrel, rising from recent lows on expectations of a coordinated production cut by major producers.
The new agreement, which includes Alta Mesa’s Kingfisher Midstream pipeline unit, must be approved by the judge overseeing the Alta Mesa bankruptcy case.
The judge has scheduled a hearing for April 8. If the sale is not concluded at that hearing, the court has said it would consider breach of contract claims on the failure of the original purchase agreement.
(Reporting by Gary McWilliams; Editing by Paul Simao)
