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Forcenergy finds bankruptcy filing complicates its business Inlet producer looking at offers for interim financing; says development of Redoubt Shoal likely will be delayed by financial problems Allen Baker PNA Contributing Writer
Forcenergy Inc. is moving forward on a reorganization plan after a Chapter 11 bankruptcy filing that came on March 21.
Chapter 11 allows existing management to keep operating the company, but it “complicates the hell out of everything,” said Russ Porter , executive vice president of Miami-based Forcenergy. The company is looking at “numerous offers” for interim financing during the bankruptcy period, Porter said.
Forcenergy’s big project in Alaska — a new platform for the Redoubt Shoals area of Cook Inlet — is likely to be delayed by the financial problems, Porter said. Still, he said Forcenergy is “contemplating a plan that involves moving that platform (from Korea to Cook Inlet) while we are still in bankruptcy.
“We’re very committed to that project,” Porter said. “If prices stay up, it helps get the project up sooner rather than later.”
Earlier this year, the company put some of its properties in the Gulf of Mexico on the block in an attempt to raise some cash. But the response wasn’t encouraging.
“We had to put them on the market to see if we could get a reasonable price,” he said. “What we found is that even for good properties, the market isn’t there now.” The company sees plenty of potential in those properties in the long run, Porter said.
Forcenergy expanded quickly in recent years, aggressively buying Alaska properties that made it the sixth-largest holder of leases here with nearly 180,000 acres. But along with that expansion, Forcenergy took on heavy debt — including about $315 million in a credit line and $375 million in notes.
Low oil prices took their toll, and the banking group that extended the credit line wanted Forcenergy to trim it by $20 million in May. That put additional pressure on the company, and with no decent bids on the Gulf properties, executives decided on the bankruptcy alternative. On fast forward Before that filing, Forcenergy announced it would write down its assets by $225 million to $275 million when it issued yearend financial figures. Those were originally scheduled for March 31, but the company now plans to release those numbers on April 15.
“We’ve been so consumed with preparing the necessary filings and documents for the first phase of the reorganization, we haven’t been able to complete the financials,” Porter said. The company has an initial 120 days to submit a reorganization plan, but Porter said that could be extended.
With the bankruptcy, Forcenergy lost its listing on the New York Stock Exchange, where it traded under the symbol FEN. The company now trades on the OTC Bulletin Board, a couple major steps down from the NYSE, under the symbol FENYQ.
After plunging to just 75 cents a share early this year, Forcenergy stock had rebounded and was trading for $2.13 a share before the bankruptcy filing. Trading was suspended by the exchange, and when it resumed on the OTC market April 1, the stock was back at 75 cents a share by the close of trading. Volume was 416,000 shares, similar to the average previously.
If oil prices continue to firm, Forcenergy could come back out of bankruptcy in good order, though Porter wouldn’t venture a guess on how long that might take. But he showed some optimism in the face of Forcenergy’s difficulties.
“It’s a good time to reorganize — right before things get better,” he said.
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