March 23, 2017 9:36 PM ET

Oil, Gas and Consumable Fuels

Company Overview of Escambia Operating Company, LLC

Company Overview

Escambia Operating Company, LLC operates gas producing properties and facilities in Escambia County, Alabama. The company was incorporated in 2006 and is based in Houston, Texas. Escambia Operating Company, LLC is a subsidiary of Vanguard Operating, LLC. On February 1, 2017, Escambia Operating Company, LLC filed a voluntary petition for reorganization under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. It is in joint administration with Vanguard Natural Resources, LLC.

16701 Greenspoint Park Drive

Suite 200

Houston, TX 77060

United States

Founded in 2006

Phone:

251-368-6700

Fax:

251-368-6730

Key Executives for Escambia Operating Company, LLC

Chief Executive Officer of Eagle Rock Energy GP L P
Age: 56
Compensation as of Fiscal Year 2016.

Escambia Operating Company, LLC Key Developments

Joint Reorganization Plan & Related Disclosure Statement Filed by Vanguard Natural Resources, LLC

Vanguard Natural Resources, LLC, along with its affiliates, filed a joint plan of reorganization and related disclosure statement in the US Bankruptcy Court on February 25, 2017. As per the plan filed, general administrative claims, professional compensation, adequate protection claims, DIP facility claims, priority tax claims and statutory fees will be paid full in cash. Other secured claims and other priority claims shall be paid full in cash. Lender claims will get Exit Revolving loans and Electing lender payment amount, if claimant elected to participate in the Exit Revolving Loans or otherwise will get Exit Term Loans. Second lien notes claims shall receive its pro-rata share of new second lien notes. Senior notes holders shall receive pro-rata share of senior note claim distribution and opportunity to participate in 1145 Rights offering. General unsecured claims shall receive pro-rata share of reorganized VNR common stock. Trade claims shall receive cash in an amount equal to pro-rata share of trade claims distribution pool. Intercompany claims shall either be reinstated, compromised, extinguished or settled or canceled and shall receive no distribution on account of such claims. Intercompany claims relating to any post-petition payments shall be paid full as a general administrative claim. Intercompany interest shall be reinstated as of the effective date. VNR preferred units shall be cancelled and holders shall receive VNR preferred unit equity distribution and VNR preferred unit new warrants. VNR common units shall be cancelled and holders shall receive pro-rata share of VNR common unit new warrants. Other existing equity interests shall be cancelled and holders shall not receive any distribution. The plan will be funded through issuance of equity, preferred equity, warrants and rights. Debtor will also issue exit facility and new notes to the fund the plan.

Motion for Asset Sale Filed by Vanguard Natural Resources, LLC

Vanguard Natural Resources, LLC filed a motion in the US Bankruptcy Court for the sale of its excess assets on February 7, 2017. The debtor seeks the Court’s approval for the sales procedures to sell its excess assets for the highest and best offer received. The debtor’s assets include excess assets that are no longer necessary or useful in the conduct of its businesses. With regard to sales of Excess Assets in any individual sale or series of related sales to a single buyer or group of related buyers with an aggregate sale price equal to or less than $0.50 million, debtor is authorized to consummate such sales if debtor determines in the reasonable exercise of its business judgment that such sales are in the best interest of its estates without further order of the Court or notice to any party. Any such sales shall be free and clear of all liens, claims, encumbrances, and other interests. With regard to sales of Excess Assets in any individual sale or series of related sales to a single buyer or group of related buyers with an aggregate sale price greater than $0.5 million and up to or equal to $10 million, debtor shall file a written notice of the sale to the notice parties. The Sale Notice shall identify in reasonable detail, the Excess Assets being sold, the purchaser of the assets, the purchase price, and the material terms of the sale Agreement. Any objection to the proposed sale of Excess Assets must be in writing, state the nature of the objection and served to counsel for debtor. Any higher offer, including a Credit Bid, for an Excess Asset must be on the same terms as the transaction described in the Sale Notice, other than the amount bid, except for a Credit Bid, be accompanied by a cash deposit in the form of a certified or bank check made payable to debtor in the amount required by the Sale Notice, be a firm offer and not be subject to contingencies including the acquisition of financing or further due diligence, and served to counsel for debtor. If no Objections or Counteroffers are received by debtor within 14 days of the service of the Sale Notice, debtor may immediately consummate the sale, without further order of the Court or notice to any party. If an Objection is timely received by Vanguard and cannot be resolved consensually, then the Excess Assets shall only be sold upon further order of the Court. If a timely Counteroffer is received by counsel to debtor, debtor is authorized to solicit higher or otherwise better bids from all prior bidders and may consummate a proposed transaction based on the highest or otherwise best offer without further order of the Court or notice to any party. Debtor will file a separate motion and seek court approval for any sale of any individual Excess Asset or multiple Excess Assets in any sale with a single buyer or group of related buyers with an aggregate sale price in excess of $10 million. The hearing is scheduled for March 1, 2017.

DIP Financing Approved for Vanguard Natural Resources, LLC

The US Bankruptcy Court gave an order to Vanguard Natural Resources, LLC to obtain DIP financing on an interim basis on February 2, 2017. As per the order, the debtor has been authorized to obtain a revolving credit facility in the amount of $15 million out of the total revolving credit facility of $50 million including up to $5 million for letters of credit from Citibank, N.A., Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. with Citibank, N.A. acting as the administrative agent. The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin, but in no event to exceed the maximum nonusurious interest rate. The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin, but in no event to exceed the maximum nonusurious interest rate. Applicable Margin for any day, with respect to any ABR Loan is 4.50% per annum and with respect to any Eurodollar Loan is 5.50% per annum. As per the terms of the DIP agreement, the loan carries a commitment fee of 1% p.a. A participation fee with respect to each DIP Lender’s participations in Letters of Credit shall accrue at 5.50% per annum on the average daily amount; a fronting fee shall accrue at the rate of 0.35% per annum on the average daily amount of the Letters of Credit Exposure and administrative agent fees shall be payable in the amounts and at the times separately agreed upon between the borrower and the administrative agent. The DIP facility would mature on the nine-month anniversary of the Interim Facility Effective Date. Adequate protection would be provided to the DIP lenders in the form of super-priority administrative expense claims which is subject to a carve-out of $2.5 million towards unpaid professional fees / administrative expenses and first priority lien upon and security interest in the debtor’s collateral. In the event the Chapter 11 Cases are converted to chapter 7, there shall be a separate carve-out of $0.03 million in the aggregate that may be used for the reasonable fees and expenses of a chapter 7 trustee and such separate Trustee Carve-Out shall have the same priorities as the Carve-Out. The proceeds of the Borrowings shall be used by the Borrower to pay certain costs and expenses of administering the Chapter 11 Cases, fund the working capital needs, capital improvements, and other general corporate purposes of the Borrower and its Subsidiaries and make the payments provided for in the DIP Order, subject to compliance with the DIP Budget and Federal Reserve Board regulations. The final hearing is scheduled for February 24, 2017.

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