Thursday, June 4, 2015

Samson on the Ropes

Samson Resources, which operates two subsidiaries in the Haynesville Shale, Samson Lone Star (TX, obviously) and Samson Contour (LA), looks like dead man walking, as it grapples with low energy prices and a high debt load.  All of the producers have to deal with the low prices, but Samson is saddled with around $3.6 billion of debt from its $7.2 billion 2011 acquisition by private equity investor KKR in addition to its operating debt.

The company has tripped debt defaults, although some provisions have been suspended temporarily by the bank, and has begun large scale layoffs.  It also announced last week that it has ceased drilling for now to conserve cash.  It had previously tried to sell off assets but didn't get much interest.

If you believe the New York Post, KKR is ready to walk away and hand the keys to the lenders.  If that's the case, we may be looking at a yard sale.  I'm sure the vultures are circling the company's debt looking for an opportunity.  In any case, it doesn't look good for Samson, or at least for its equity holders.

The company hasn't been an active driller in the Louisiana Haynesville since December 2011 or in Texas since March 2012.  I don't know the status of their Haynesville leases.  The company still lists the Haynesville as an operating area, but it says it is focusing on the liquids in the area, mostly in Cotton Valley and Travis Peak.

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