Venoco files voluntary Chapter 11, reaches agreement with lenders

Venoco says it will continue normal operations and meet its financial obligations throughout restructuring process

Venoco founder Tim Marquez

DENVER, CO – Venoco, Inc. has announced that it has reached an agreement with its senior lenders to reduce the company’s debt load and restructure the balance sheet.

“Today’s announcement represents another significant step in our ongoing efforts to address the challenges before us and position the company for long-term success,” said Mark DePuy, Venoco’s CEO.

Venoco says the closure of the Plains All-American pipeline, which suffered a major leak in May 2015 and for which there is no certain restart date, has resulted in the curtailment of more than 50 per cent of it’s production. Management skipped a $13.7 million interest payment due Feb. 16.

Under the terms of the agreement, lenders have agreed to support a restructuring transaction that will eliminate approximately $1 billion of debt from Venoco’s balance sheet and position the company for long-term success.

“After carefully evaluating our options, we have determined that the agreement to restructure our balance sheet and reduce our debt represents the best way to strengthen our finances and position ourselves for the future,” said DePuy.

To facilitate this financial restructuring, Venoco today has filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

“While we continue to be in a strong cash position, the declining price of oil and the ongoing closure of Plains All American pipeline 901 continue to be serious problems. With this agreement, Venoco will be in a much stronger position to withstand these challenges and others that may follow,” DePuy continued.

“Both during and after this process, Venoco will maintain the same commitment to safety, environmental protection and the communities in which we operate. Venoco is and continues to be a remarkable company with award winning operations, excellent employees, and robust energy-producing assets,” said DePuy.

The company says it has sufficient liquidity to continue its normal oil and gas activities and meet its ongoing financial and regulatory obligations.

Upon approval by the bankruptcy court and satisfaction of customary conditions, the company’s existing liquidity and generated cash from ongoing operations will be used to support the company during the restructuring process.

Venoco founder Tim Marquez will remain Executive Chairman during the restructuring process. The company’s senior lenders have retained him to provide leadership and strategic counsel to the company after the company emerges from restructuring.