Market Conditions Upend Yuma Energy's Restructuring



Market Conditions Upend Yuma Energy's Restructuring
There is no assurance that any transaction or alternate restructuring plan will materialize.

Houston-based Yuma Energy Inc. reported that it is currently not in compliance with the terms of its recent restructuring agreement and related credit arrangements.  As a result, no additional funds are available to Yuma under the facility.

There is no assurance that any transaction or alternate restructuring plan will materialize, the company said in a written statement.

In September 2019, YE Investment LLC, an affiliate of Red Mountain Capital Partners LLC, purchased all of Yuma’s outstanding senior secured bank debt and related liabilities under the company's senior credit facility.  The credit facility was then modified to reduce the outstanding balance from $32.8 million to $1.4 million. Yuma then entered into a restructuring agreement which was later amended in December 2019.

"Over the past few months, we have been diligently working to complete our financial restructuring and have been reviewing potential transactions to expand our footprint, improve our economics, increase our production volumes, and ultimately, generate positive cash flow,” Anthony C. Schnur, Interim Chief Executive Officer and Chief Restructuring Officer of Yuma, said in a written statement.

“However, certain well failures and the recent significant collapse in oil prices, combined with the uncertainty about the economy caused by the COVID-19 virus, has adversely impacted our ability to complete the restructuring process and appropriately re-capitalize the company.  A special committee of the board has been established to evaluate strategic or financing alternatives, if any. However, the current unfavorable energy market and volatile economic environment may limit our options at this time.”

"In the event we are unable to come to a mutually agreeable understanding with Red Mountain regarding the extension/modification of the restructuring agreement, modified note and related agreements, and/or find other available financing, we may be forced to cease our business plan, sell assets or take other remedial steps, which may include seeking bankruptcy protection."

Yuma is an independent exploration and production company focused on conventional and unconventional oil and natural gas resources. Historically, its activities focused on inland and onshore properties, primarily located in central and southern Louisiana and southeastern Texas.

To contact the author, email bertie.taylor@rigzone.com.



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