The April 29 Chapter 11 bankruptcy filing of and its subsidiary,Ultra Wyoming LGS LLC, which leases CorEnergyInfrastructure Trust Inc.'s PinedaleLiquids Gathering System in Wyoming, as well as the circumstances thatprompted the filing, constitute events of default under the terms of the Pinedalelease, CorEnergy said.
The company said that although the filing stays its ability toexercise remedies for certain of those defaults, Section 365 of the Bankruptcy Coderequires Ultra Wyoming to comply on a timely basis with many provisions of the Pinedalelease, including the payment provisions.
However, Ultra Wyoming could be granted an exception to the code'sprovisions if it takes "specific action" to reject the Pinedale lease,CorEnergy said, noting that as of May 2, Ultra Wyoming had not done so.
CorEnergy added that in Ultra Petroleum's Form 10-Q, also filedApril 29, the company stated, "A termination of the Pinedale Lease Agreementwould significantly disrupt our ability to produce oil and gas from Pinedale fieldwhich would have a material adverse effect on our business, financial condition,results of operations, and cash flows."
CorEnergy will provide further updates on the lease deal whenthey arise, CEO Dave Schulte said in a release.