Cox Oil’s sale to W&T Offshore draws objection from DIP agent

By Sarah Lizee

Olympia, Wash., Dec. 21 – Cox Oil Offshore, LLC’s proposed asset sale to W&T Offshore, Inc. drew an objection from debtor-in-possession facility agent Amarillo National Bank on Wednesday, according to documents filed with the U.S. Bankruptcy Court for the Southern District of Texas.

In October, Cox Oil and W&T Offshore, Inc. reached an impasse regarding the proposed sale of various oil and gas interests, and the debtors said that they were “pivoting to a different path” involving a plan.

However, on Dec. 13, the debtor filed a revised sale notice containing a modified executed purchase and sale agreement with W&T, through which the company now seeks to sell some of its assets for about $72 million.

The current agreement removes the purchase price adjustments that contributed to the impasse over the initial agreement, the DIP agent said.

Amarillo said the DIP lenders have not provided their consent for the debtor to proceed with the currently proposed sale for two primary reasons.

First, the lenders said they do not have enough evidence that the debtor and W&T can close the sale based on some of the conditions.

And second, the debtor will not agree to fulfill its obligation to make a mandatory prepayment of the DIP loans upon receipt of the sale proceeds, the lenders added.

“The DIP credit agreement is clear – if the debtors obtain net proceeds from an asset sale in excess of $100,000, the debtors must make a mandatory prepayment of the DIP loans with those proceeds,” the DIP agent said in the objection.

“The debtors have avoided this obligation once already by refusing to make the mandatory prepayments required when they received the Atina proceeds from the sale of the Atina litigation, despite demand from the DIP lenders.”

The Dallas-based drilling company filed bankruptcy on May 14, 2023 under Chapter 11 case number 23-90324.

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