Case Study

Financial Advisory

Victerra Energy Services

THE FIRE

Prior to the global collapse in oil prices which yielded historic lows, Victerra Energy Services was already struggling to sustain profitability in its, private equity, backed oil and gas exploration venture. Amidst a concerted effort to change their course, it became imminent the company could no longer continue to operate their assets given their cash runway and its diminishing returns.

Over $200 million had been invested into the enterprise and the secured lender, a money center bank, had a secured debt of $15 million. This coupled with a growing account payable of delinquent balances totaling over $3.3 million and on-going operational burn due to high cost producing wells created a lose/lose scenario if handled improperly.

Considering all these factors, poor operating/drilling results and high operating and transportation costs, the company and their investors agreed they needed help.

THE RESCUE

MACCO was engaged as the Chief Restructuring Officer and Financial Advisor by the company with the approval of the private equity sponsor with the support of JP Morgan. MACCO delivered an expedited and comprehensive assessment which analyzed the company’s current state of operations and financial position.

Deliverables included providing comprehensive cash forecasts, assumption of all operational duties, development and implementation of an enhanced operational plan combined with a vibrant and broad sale of its producing and non-producing assets through a Chapter 11 filing and a transparent 11 U.S.C. 363 (b) sales process.

THE RESULT

MACCO was empowered as sole management of the business while seamlessly operating it in an extremely challenging and complex landscape to implement necessary changes to preserve cash, while assuring safe and regulatorily compliant oil & gas production operations.

After preparing and filing a chapter 11 case in Houston and working closely bankruptcy counsel, MACCO led the efficient and expedited sales process utilizing EnergyNet.com. The assets received wide market exposure to over 545 potential buyers, resulting in ten offers from six unique, financially qualified companies.

The accepted bid, from an industry leader, was for an impressive $22.3 million, despite some market professional’s opinions, anticipating the assets would receive offers between $5-7 million. Upon internal acceptance, court approval and closing of the sale, where the secured lender received approximately a 90% return on its total loan, MACCO then spearheaded the winddown of company operations and the filing of a consensual liquidating chapter 11 plan of reorganization.