trending Market Intelligence /marketintelligence/en/news-insights/trending/_GthVO4AZ1plWLRpMMzc1w2 content
Log in to other products

Login to Market Intelligence Platform


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

If your company has a current subscription with S&P Global Market Intelligence, you can register as a new user for access to the platform(s) covered by your license at Market Intelligence platform or S&P Capital IQ.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *
  • We generated a verification code for you

  • Enter verification Code here*

* Required

In This List

Texas judge jettisons Alta Mesa's attempt to reject oil, gas gathering contracts

Essential Energy Insights - May 14, 2020

Credit Risk: Identifying Early Warning Signals In The Oil And Gas Industry

Stress Testing Energy Companies in the Current Environment

Infographic Solar Power by the Numbers The US Canada and Mexico

Texas judge jettisons Alta Mesa's attempt to reject oil, gas gathering contracts

A Texas bankruptcy court judge ruled that pure-play STACK operator Alta Mesa Resources Inc. and subsidiary Alta Mesa Holdings LP cannot use Chapter 11 proceedings to reject oil and gas gathering contracts with Kingfisher Midstream LLC

"While Alta Mesa retained the right to determine whether and when to capture its mineral reserves, it surrendered the right to determine what happens to the reserves once it drills," Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division, wrote in a Dec. 20 opinion.

Kingfisher, which is also a subsidiary of Alta Mesa Resources, signed the agreements in 2015. They were amended in 2016 to save the parent company money as commodity prices slumped, but still encompassed all of Alta Mesa Resources' Oklahoma hydrocarbons.

"At the heart of this dispute is Alta Mesa's belief that its owners, sitting on both sides of the negotiation table, agreed to pay Kingfisher exorbitant gathering fees," Isgur said. "According to Alta Mesa, its value as a going concern will increase if it is able to renegotiate its gathering arrangements, either with Kingfisher or a third party."

Alta Mesa Resources in September filed for Chapter 11 bankruptcy after laying off about one-third of its 200 employees and writing down the value of its assets by $3.1 billion. The company said in May that it had received delisting warnings from the Nasdaq stock exchange due to delayed financial reports, and it was delisted in September.

Fitch Ratings wrote in a November report that potential upstream bankruptcies could jeopardize North American gathering and processing companies' cash flows and credit in 2020, and Chesapeake Energy Corp.'s default concerns have weighed on midstream provider Crestwood Equity Partners LP's stock price. Still, Williams Cos. Inc. President and CEO Alan Armstrong said in December that he has never seen one of Williams' gathering contracts get rejected by a customer going through bankruptcy.

"There is no other feasible way to move the commodity to the market and get paid than to own the gathering system, and so if you think about the opportunity to reject a contract you would have to believe that the avoided cost of building a brand-new system ... is better than that current pricing," he said.