White Star Petroleum, LLC the Oklahoma City-based oil and gas exploration company that assumed ownership of wells and mineral leases formerly held by American Energy Woodford has filed a petition for reorganization under Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware.
White Star filed its voluntary petition four days after some of its subcontractors, who said their bills aren’t being paid, filed an involuntary Chapter 11 action against the company in the United States Bankruptcy Court for the Western District of Oklahoma.
The petitioners asserting claims against White Star are:
Mustang Heavy Haul, LLC, a Tulsa oilfield services firm that claims it is owed $387,595.
Latshaw Drilling Company, LLC a Tulsa drilling company that claims it is owed more than $1.3 million.
MS Directional Drilling a Texas firm that claims it is owed $500,778.
Baker Hughes Oilfield Operations, LLC, a Texas firm that claims it is owed $more than $2.3 million.
Cactus Drilling Company, LLC, an Oklahoma City company that claims it is owed $900,824.
Chapter 11 reorganizations are usually meant to keep a business alive and pay its creditors over time.
White Star operates approximately 883 productive wells in Oklahoma, including many in Payne County. It also holds many mineral leases.
White Star secured $28.5 million in financing to pay fees and expenses connected to the bankruptcy action. The company says it expects to also generate positive operating income during the Chapter 11 case.
The company had not expected its creditors to file the involuntary action, according to the bankruptcy blog published by Cole Schotz, a legal firm that provides bankruptcy and corporate restructuring services. White Star said it was already preparing its voluntary filing when the other action was filed in Oklahoma.
The company issued a statement saying it is exploring strategic alternatives, including the sale of its business and the restructuring of its debts in a court-supervised process.
"White Star is continuing to operate its business during the strategic process, and with the DIP financing, has sufficient liquidity to timely pay all employees, vendors and suppliers for services and products provided during Chapter 11," CEO Elliot Chambers said. "We recognize that the uncertainty of the past months has been difficult for many of our stakeholders but are pleased to have the support of our RBL lenders and an appropriate budget established for operations in Chapter 11."
White Star creditors, including people who leased their mineral rights to the company, should be receiving forms in the mail for filing claims in the involuntary bankruptcy action.
The deadline to file a proof of claim in that action is Aug. 23.