Rockall Energy Holdings, LLC – Seeks Approval of Bidding Procedures for Expedited Asset Sale, Lazard to Lead Re-Booted, In-Court Sales Process

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March 10, 2022 – The Debtors filed a motion requesting each of a bidding procedures order and a sale order [Docket No. 16]. The bidding procedures order would (i) approve bidding procedures in respect of the sale of substantially all of the Debtors’ assets (the "Sale"), (ii) authorize the Debtors to select a stalking horse bidder (and offer bidder protections to that stalking horse to include a 2.5% break-up fee and a $400k expense reimbursement), and (iii) approve a timetable culminating in a May 4, 2022 auction and a May 13, 2022 sale hearing. The sale order would approve the Sale.

The Debtors' "accelerated" (80 days to close a sale) post-filing sale efforts will build on prepetition efforts and are to be led by recently engaged investment banker Lazard; with the in-court sales process part of an approach agreed by RSA parties which may still include an "alternative equitization" transaction.


On March 9th privately held Rockall Energy Holdings, LLC and 15 affiliated Debtors (“Rockall Energy” or the “Debtors,” a U.S-centric carbon storage business) filed for Chapter 11 protection (on a "prepackaged" basis) noting estimated assets between $100.0mn and $500.0mn; and estimated liabilities between $100.0mn and $500.0mn.

At filing, the Debtors stated that “the tumultuous drop in commodity prices beginning in January 2020 stunted the Company’s ability to grow production and…[c]ommodity prices remained depressed on account of, among other things, the impact and uncertainties related to the novel coronavirus ('COVID-19'). The lack of liquidity during this period was a significant opportunity cost for the Company: Without sufficient liquidity to further develop its Northern Assets, the Company was unable to utilize the maturing midstream agreements and satisfy the volume requirements under the MVC….This series of events turned the midstream contracts on their heads. Although they may have been valuable to the Company if the Company had been able to pursue its planned Northern Asset capital expenditures and realize significant production increases, the midstream contracts became significant liabilities once the depressed commodity prices and impacts of COVID-19 derailed its growth strategy.

Marketing Process 

The motion notes, “The Debtors filed these chapter 11 cases after obtaining the support of the Term Loan Agent [Goldman Sachs Bank USA] and the Secured Parties for a comprehensive in-court restructuring strategy that contemplates the Debtors’ continuation of their prepetition sale and marketing efforts through a court-approved, competitive bidding and auction process designed to maximize value for all stakeholders. As described more fully in the First Day Declarations and in the Bonebrake Declaration, after extensive, arm’s-length negotiations, the Debtors, the Term Loan Agent, and the Secured Parties entered into that certain Restructuring Support Agreement (the ‘RSA’) on March 9, 2022, which sets forth the agreed-upon terms for the Debtors to pursue a consensual in court sales process and alternative equitization which, subject to the terms of the RSA and the Bidding Procedures, will be implemented pursuant to the Debtors’ Joint Prepackaged Chapter 11 Plan (the ‘Chapter 11 Plan’), filed contemporaneously herewith.

In consultation with the Term Loan Agent and its advisors, the Debtors began exploring a process to sell some or all of their assets (the ‘Out-of-Court Sales Process’) in September 2021. During the marketing phase of the Out-of-Court Sales Process, the Debtors and its advisors targeted over 150 strategic and/or financial parties, resulting in 28 parties executing NDAs and accessing the data room. Of these 28 parties, six submitted initial indications of interest. Ultimately, bids received in the Out-of-Court Sales Process were not acceptable and the Debtors determined not to pursue the Out-of-Court Sales Process any further. Subsequently, in December 2021, the Debtors engaged Lazard Frères & Co. LLC (‘Lazard’) as investment banker in connection with the Debtors’ exploration of liability management transactions. On March 4, 2022, Lazard re-commenced the Debtors’ Out-of-Court Sales Process and has since worked to engage potential financial and strategic buyers to solicit their interest in purchasing the Debtors’ Assets, either in whole or in part.

The Debtors are pursuing their restructuring goals—including the sale and marketing process proposed in this Motion and in the Bidding Procedures—on an accelerated timeline as further outlined in the RSA and memorialized in the milestones under the proposed debtor-in-possession financing facility (the ‘DIP Facility’). The Sale Schedule set forth in this Motion corresponds with such milestones and builds upon the momentum of the Out-of-Court Sales Process and prepetition marketing process and promotes an efficient path to consummating a sale within 80 days of the Petition Date. This schedule will facilitate an open, orderly, and efficient process for the solicitation and evaluation of Bids and avoids a prolonged post-petition marketing period that could add unnecessary administrative expense to the detriment of the Debtors’ estates and stakeholders. At the same time, the Sale Schedule and proposed case timeline provide ample time for parties in interest to receive appropriate notice of and opportunity to object to confirmation of the Chapter 11 Plan and entry of the Sale Order.

To maximize the Debtors’ flexibility with respect to any potential Sale(s), the Debtors are marketing for sale and will consider Bids for all or substantially all of the Debtors’ Assets and for subsets of the Debtors’ Assets, and will further consider Bids in the form of a reorganization or acquisition of the Debtors’ equity interests, or a merger or other combination with one or more Successful Bidders. The RSA, the Chapter 11 Plan, and the Bidding Procedures contemplate that a Sale to a Successful Bidder will be implemented through the Chapter 11 Plan pursuant to the plan sale provisions of section 1123(a)(5)(D) of the Bankruptcy Code, although in certain circumstances such a Sale may be implemented pursuant to a sale order under section 363 of the Bankruptcy Code.

Importantly, the Term Loan Agent and the Secured Parties, the Debtors’ largest secured creditors, support the proposed marketing and sales process, including the proposed Bidding Procedures and Sale Schedule. To further increase the competitiveness of the sales process, the Debtors seek authority to select one or more parties to act as a Stalking Horse Bidder and to provide any such Stalking Horse Bidder with Bid Protections in the form of a break-up fee and/or expense reimbursement, as described in further detail below. The proposed Bidding Procedures, including such Bid Protections, and Sale Schedule are critical to achieving the Debtors’ paramount goal of maximizing the value of their estates for the benefit of their stakeholders. Accordingly, the Debtors respectfully request that the Court enter the Bidding Procedures Order and, ultimately, approve any Sale that is achieved as a result of the Bidding Procedures.”

Propsed Key Dates:

  • Stalking Horse Designation Deadline: April 18, 2022
  • Bid Deadline: April 29, 2022
  • Cure, Consent, or Preferential Right Objection Deadline: April 29, 2022
  • Auction: May 4, 2022
  • Sale Objection Deadline: May 6, 2022
  • Sale Hearing: May: 13, 2022

Significant Shareholders

The Debtors were formed as part of a "merger of equals" in June 2018. 40% shareholder White Marlin is a portfolio company of Parallel Resource Partners (itself an investment platform of Bluescape). 39.2% shareholder Petro Harvester is a portfolio company of TPG Capital.

About the Debtors

According to the Debtors: “Rockall Energy is a privately held US focused company, focused on development of a profitable carbon storage business through the utilization of existing oil and gas assets to incubate the portfolio.

Our corporate office is located in Dallas, TX, however, we have field offices and production in Mississippi, Louisiana and North Dakota.”

Corporate Structure

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