Apollo-backed Venoco files for bankruptcy

The energy firm had previously filed for Chapter 11 in March 2016.

Venoco, an oil and gas company operating in California, filed its second Chapter 11 petition in Delaware this week, bankruptcy court documents show.

The firm, a portfolio company of Apollo Investment Corporation, expects to sell or wind down its assets through the bankruptcy process, the company said on Monday. As it pursues the sale of its assets, Venoco will continue operations as usual.

Venoco previously sought court protection in March 2016, documents filed in the US Bankruptcy Court for the District of Delaware show. The company exited Chapter 11, but the case is still open. As a part of the restructuring, Apollo and MAST Capital swapped out their debt for equity. Apollo Global Management, through its affiliates, owns a 74.01 percent equity stake in the struggling company, according to court records in the most recent Chapter 11 case.  Apollo Investment Corporation, specifically, owns 23.17 percent of Venoco’s equity.

On its latest earnings call this February, chief financial officer Greg Hunt said the value of its investment in Venoco was “negatively impacted” due to a “deteriorating outlook”.

Apollo wrote down the Venoco equity investment from $36.3 million to $10.7 million for the three months ending 31 December, according to the firm’s financial statements.

Hunt said on the call that the fourth-quarter net loss on the portfolio totalled $25 million, compared to a net gain of $1.6 million for the quarter ending 30 September, and that contributed to the loss.

Mike Wracher, chief operating officer at Venoco, attributed the company’s bankruptcy to ongoing weak financials, in part due to the closure of the Plains Line 901 pipeline in Santa Barbara, California.

“We have pursued a number of market-based and regulatory solutions to address these challenges during the last year,” Wracher added in the statement. “Despite these considerable efforts, our financial position now compels us to take this action.”

Late last year, Venoco retained Bracewell as legal counsel and Zolfo Cooper as financial advisor to discuss both in- and out-of-court restructuring possibilities, Venoco chief restructuring officer Bret Fernades said in a declaration filed with the court.

Prior to this week’s filing, the debtor also handed over its leases in the South Ellwood Field project to the state government, commencing a process to maintain those assets through a state-designated operator, the company also said.

The firm is primarily focused on the acquisition, exploration and development of oil and natural gas properties in Golden State, according to the statement.

The company was not available to comment further.

Apollo did not respond to requests for comment.