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Forcenergy set to climb out of chapter 11 bankruptcy Cook Inlet platform among projects awaiting OK from New Orleans judge Allen Baker PNA Contributing Writer
Forcenergy Inc. is set to come out of Chapter 11 bankruptcy protection shortly with a new batch of shareholders and a reformulated board, company officials say.
“We’ll have the strongest balance sheet in our corporate existence,” said Forcenergy Executive Vice President Russ Porter. “We’ll be backed by substantial equity players. It puts the company in a very good position to grow going forward.”
And Alaska’s major role in Forcenergy’s plans hasn’t changed, Porter told PNA in early January. At that time, the Miami-based company was still waiting for the final OK on the deal from the judge in U.S. Bankruptcy Court in New Orleans.
“We’re hoping to get this out of the way so we can formalize our capital planning,” he said.
Former unsecured creditors will hold the lion’s share of the new Forcenergy stock, with three major entities holding a controlling interest, Porter said. Former shareholders will get just 4 percent of the new stock. The current four-member board will be expanded to nine, with the unsecured creditors electing the additional five directors.
Anschutz major new shareholder One big new shareholder is Anschutz Investment Co., owned by Phillip Anschutz of Denver. Anschutz, who started out in the oil business, now has a far-flung empire that includes the Los Angeles Kings hockey team and four professional soccer teams. He was ranked 22nd on a recent list of the most powerful people in sports compiled by The Sporting News.
Oak Tree Capital Management of Los Angeles and the powerhouse Lehman Brothers of New York also will hold major chunks of stock after the reorganization.
Creditors and stockholders voted on the reorganization plan in November, and all asset classes favored the plan, Porter said. The bankruptcy judge held hearings Dec. 13 and Dec. 20, then took the issue under advisement, according to Porter.
“We don’t think there’s anything out there that would cause the judge to reject the plan,” Porter said. “We’re waiting for the official word.” That could come in a matter of days or weeks, he said.
Secured creditors will get 100 cents on the dollar plus interest, according to Porter.
Cook Inlet a critical The financial reorganization “doesn’t scale back our approach in Alaska at all,” Porter said. “Cook Inlet is a critical operating area for the company.”
The Osprey platform, set to be installed north of Kalgin Island in Cook Inlet, is high on the list of projects for this year. Company officials hope to begin drilling from that platform by the fall of this year.
While Forcenergy is bullish on Alaska, it isn’t likely to take a shot at any properties that might be spun off if the BP Amoco-ARCO merger goes through. “We’re going to concentrate in the Cook Inlet area,” Porter says.
Alaska is one of the two major focus areas for Forcenergy, with the state holding about 18 percent of Forcenergy’s net proved reserves of more than 110 million barrels of oil equivalent. The Gulf of Mexico holds 64 percent. The company also has undeveloped acreage in Africa and Australia.
Forcenergy’s Alaska properties make it seventh-largest among leaseholders here, just behind ExxonMobil. The top five are ARCO, BP Amoco, Chevron, Anadarko and Unocal.
Sought protection last March Forcenergy went into Chapter 11 bankruptcy in March, seeking court protection from increasingly impatient creditors. That filing came after oil prices bottomed out last winter. Cash flow since then has been relatively healthy.
During the bankruptcy operations, the company built its cash holdings to roughly $100 million. With the company returning to normal operations, about $60 million of that will go to pay off trade creditors, Porter said. That will leave $40 million, plus cash flow in the current year, to pay for new capital projects.
“We haven’t really decided on our capital budgets,” Porter said, “but we’re going to be geared toward internally generated cash flow.”
That could be a healthy number if oil prices stay at high levels.
The company also is planning a preferred stock offering of $40 million, which will pay a stock dividend for the first four years, Porter said. That money will be used to pay down the company’s revolving credit facility, currently $320 million.
While the bankruptcy operations allowed Forcenergy to avoid a fire sale of its assets, the process complicated management and came at a high cost in legal and other fees. Porter figures those costs totaled in the neighborhood of $6 million to $7 million.
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