Chaparral Submits Restructuring Support Agreement, Announces CEO Mark Fischer’s Retirement
Oklahoma City, Wednesday, November 23, 2016 — Chaparral Energy, LLC announced today that it has reached an agreement with its consenting bondholders and lenders to convert approximately $1.2 billion of its outstanding debt to equity pursuant to the terms of a restructuring support agreement. The agreement was submitted to the U.S. Bankruptcy Court of Delaware today for approval. Chaparral originally filed for Chapter 11 protection when it began a comprehensive financial restructuring on May 9, 2016.
Under the proposed plan support agreement, Chaparral’s unsecured bondholders and general unsecured creditors will own 100 percent of the company’s ownership interest, subject to some dilution.
Furthermore, the agreement outlines Chaparral’s capital structure, which upon emergence will include the company’s cash on hand, as well as a $225 million reserve based lending (RBL) facility, which matures in 2020, with about $100 million drawn and an additional $150 million fully drawn on a four-year term loan. It also requires $50 million of new money equity from a rights offering.
“We are extremely pleased that our bondholders and lenders recognize the long-term value and potential of Chaparral. The new capital structure, coupled with the tremendous efficiency gains we have already realized from LOE, drilling and completion, and G&A cost savings will allow us to continue to develop our leading Mid-Continent STACK position for years to come,” said Chief Financial Officer Joe Evans.
In addition to its financial plan support agreement filing, Chaparral also announced the retirement of Mark A. Fischer as its chief executive officer and chairman of the board. Mr. Fischer, who founded the company in 1988, has served as its chief executive officer and chairman of the board since its inception. He will continue to direct the company over the next couple of weeks, as well as provide assistance through the end of the year, to ensure a smooth and orderly transition of his duties to Chaparral’s new Chief Executive Officer Earl Reynolds.
“With most of the work completed toward our Chapter 11 emergence, Chaparral is entering into a new era under the direction and control of a new board. I am pleased to say that my efforts and the efforts of many others have allowed us to increase the company’s financial security and ensure Chaparral’s successful future even in this extended low-price environment,” said Fischer.
“I have been fortunate to have worked alongside some of the very best this industry has to offer during my long career. I have seen and been a part of a remarkable amount of change, technical advancement and discovery, but I am most proud of the last 28 years and all that we have built and accomplished at Chaparral. I know I am leaving it and its talented employees in the best possible hands. Earl is an outstanding leader who will effectively guide the company through this transition and into its next successful chapter.”
Mr. Reynolds joined Chaparral in 2011 as executive vice president and chief operating officer before becoming its president in 2014. Prior to that time, he served as senior vice president of strategic development and led the International Business Unit at Devon Energy, as well as serving in several key leadership roles in domestic and international operations with various companies, including Burlington Resources and Mobil Oil.
“Mark has left a tremendous legacy as he has built an exceptional company that has grown to become a true leader in the Mid-Continent region. I am honored to be given the opportunity to build upon that legacy,” said Reynolds. “Chaparral’s outstanding position in the rapidly growing STACK Play is just one of the many reasons I am extremely excited about the amazing potential of our organization.”
Founded in 1988 and headquartered in Oklahoma City, Chaparral is a pure play Mid-Continent independent oil and natural gas exploration and production company. The company has capitalized on its sustained success in the Mid-Continent area in recent years by expanding its holdings to become a leading player in the liquids-rich Mississippi Lime and STACK, which is home to multiple oil-rich reservoirs including the Oswego, Meramec, Osage, Woodford and Hunton formations. Chaparral is also the nation’s third-largest carbon dioxide enhanced oil recovery producer based on number of active projects. This position is underscored by its activity in the world-class North Burbank Unit in Osage County, Oklahoma, which is the largest oil recovery unit in the state. For more information about Chaparral, please visit chaparralenergy.com.
Court filings and additional restructuring information is available on the company’s website at chaparralenergy.com/restructuring. Chaparral has set up a toll-free hotline to answer employee, vendor and royalty owner questions. The hotline is available Monday through Friday, 8:30 a.m. to 5:30 p.m. Pacific Time at 888-830-4659 (internationally at 310-751-2644).