Quicksilver closes bankruptcy sale after gas pipeline deal – Reuters
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By Tom Hals
3 Min Read
WILMINGTON, Del., April 7 (Reuters) – Bankrupt energy producer Quicksilver Resources Inc has sold its U.S. assets to private equity firm BlueStone Natural Resources II, after the buyer struck a new contract for transporting Quicksilver’s gas.
Midstream companies that gather and process natural gas have been watching the case over fears of a precedent-setting court ruling that would allow bankrupt producers to shed unwanted contracts with pipeline operators.
Wednesday’s agreement removes that threat, and clears the way for Tulsa, Oklahoma-based Bluestone to acquire Quicksilver’s assets for $245 million.
BlueStone, an affiliate of Natural Gas Partners, had said it would only close the deal if Quicksilver obtained a court order ending its “very above-market” gathering contract with midstream operator Crestwood Equity Partners.
Houston-based Crestwood said in a statement on Wednesday it agreed to a 10-year deal with BlueStone, which agreed to reopen closed wells and not reduce production for economic reasons before 2019.
“The partnership with BlueStone provides visibility to regaining volume growth,” said Robert Phillips, Crestwood’s chief executive officer. He said the terms were in line with previously announced guidance.
Crestwood shares were up 6.4 percent at $11.38 in mid-day Nasdaq trade.
Energy prices have plummeted 60 percent since 2014 and drilling has tailed off. Many producers are still paying for pipeline capacity they no longer need due to long-term contracts, which have been difficult to renegotiate.
Fort Worth, Texas-based Quicksilver became one of the first producers to challenge a pipeline deal using Chapter 11 and a ruling from the Delaware Bankruptcy Court could have set a precedent and shifted negotiating leverage.
In March, a U.S. Bankruptcy judge in New York ruled Sabine Oil & Gas Corp could use Chapter 11 to end gathering agreements, the only major decision in the current energy downturn.
Wednesday’s deal also ended a potentially precedent-setting threat to bring regulators into the dispute, which covered a pipeline network in Texas’s Barnett Shale.
BlueStone’s attorney had said that once the Crestwood agreement was rejected, the buyer planned to ask the Texas Railroad Commission to impose new contract terms for use of the pipes, which gather gas directly from Quicksilver’s wells.
Crestwood’s legal team called the threat a negotiating tactic.
Quicksilver, which filed for bankruptcy a year ago, valued its assets in 2014 at $1.2 billion. The sale to BlueStone excluded Quicksilver’s Canadian assets, which accounted for 14 percent of it revenues. (Reporting by Tom Hals in Wilmington, Delaware; Editing by Alan Crosby)
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