PetroShare

Situation

Changes to oil and gas regulation in Colorado and sustained depressed oil prices undermined the Company’s sale efforts and led to the Debtors filing a voluntary chapter 11 petition in the United States Bankruptcy Court for the District of Colorado.

The Company found itself in a contentious situation, with disputes between its Prepetition Secured Lender and certain mechanics lien claimants.

Gordian was retained by the Company after its filing to replace its pre-petition investment bank. During the pendency of its engagement, Gordian advised the Debtors on tactics and strategies – and led initial negotiating efforts with the Prepetition Secured Lender – that created the dynamics necessary to gain the requisite creditor support to effect a plan of reorganization (thereby reducing the risk associated with a contested and protracted bankruptcy and the time in which the Debtors had to operate as debtors-in-possession), including, among other things:

a) developing and then conducting a comprehensive and representative third-party sale process to inform the Debtors and their constituencies on the relative merits of such an outcome; and

b) developing the framework of a POR (ultimate implementation of which was triggered when the sale process did not reach the value at which the outcome was better for junior stakeholders.

Engagement

PetroShare Corp. was an oil and gas exploration and production company that owned and operated wells in the Denver-Julesburg Basin. Gordian was engaged by the Company as investment banker connection with its restructuring, to market and effect a sale of PetroShare’s operating assets and untapped reserves.

Outcome

Under an extremely accelerated timeline, the Company was able to confirm a consensual POR and emerge in roughly eight months, restructuring or otherwise satisfying all of its secured debt, obtaining a meaningful cash payment for its unsecured creditors and addressing P&A liabilities – all amid the backdrop of a challenging regulatory environment, a historically low price environment and the start of the COVID-19 pandemic.