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May 7
1861 - Andres Pico and partners granted state franchise to build toll road and cut 50-foot-deep cleft through (Newhall) Pass; they failed; Beale later succeeded [story]
Andres Pico


As expected, Houston-based LINN Energy LLC, along with affiliate LinnCo and their subsidiary Berry Petroleum Co., filed for Chapter 11 bankruptcy protection this week.

One of the 20 largest U.S. oil and gas producers, the companies carry $9.3 billion in debt. While oil prices have rebounded somewhat from year-ago levels, the increase has been too little, too late for the LINN companies, which suffered through two years of depressed oil prices.

Collectively, the companies produce about 59,000 barrels of oil and 607 million cubic feet of gas per day.

Localized numbers are hard to come by, but somewhere in excess of 2,000 daily barrels of oil flow from the Placerita field, which LINN owns through its subsidiary Berry Petroleum. The Placerita field is the oil drilling operation off of Sierra Highway in Newhall between Placerita Canyon and Golden Valley roads.

In its filing, LINN said it had struck a restructuring deal with at least two-thirds of its primary creditors – the holders of at least two-thirds of the outstanding principal under LINN’s major credit facility.

“We believe the (deal with creditors) reflects the confidence of our first lien lenders in the quality of our assets and represents an important step forward for the company,” CEO Mark E. Ellis said in a statement. “We believe that these steps will provide us the financial flexibility to successfully manage in the current commodity price environment and, when combined with constructive agreements with our remaining creditors and potential third party financing, will provide a platform for future growth.”

But fearing they’d be left holding an empty bag, Berry’s separate unsecured creditors signaled their intent to wrestle control of the subsidiary.

berrypetroleum0213aBerry’s and LINN’s debts and assets were never fully integrated. Their books have been separate since their merger just two years ago. (Berry owned the Placerita oilfield prior to the merger.)

Bloomberg reports that a group of Berry creditors who hold about two-thirds of Berry’s $834 million in unsecured debt will try to work out a consensual reorganization plan. According to Bloomberg, the group intends to unravel the merger and make Berry its own separate company again.

On Friday, LINN, LinnCo and Berry announced that the U.S. Bankruptcy Court for the Southern District of Texas approved their request to continue day-to-day operations.

“The approved motions give the company the authority to, among other things, continue to pay employee wages and benefits without interruption, to utilize its current cash management system, and to make royalty payments,” they said.

“The company anticipates that the cash available to it during its Chapter 11 Cases will likely provide sufficient liquidity to support the business during the financial restructuring process. For goods and services provided post-Chapter 11 filing, the company intends to pay vendors in full under normal terms.”

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