Apollo Weighing Investment in Sanchez Energy Debt

(Bloomberg) -- Apollo Global Management LLC is weighing an investment in struggling oil producer Sanchez Energy Corp.’s debt, according to people with knowledge of the matter.

The New York-based private equity firm is among the potential investors that may buy Sanchez’s debt to take control of the company as part of a restructuring, said the people, who asked not to be identified because they weren’t authorized to speak publicly. The Sanchez family could keep a minority interest under the new shareholding structure, the people said.

A spokesman for Apollo declined to comment. Representatives for Houston-based Sanchez didn’t respond to requests for comment.

Sanchez has a debt load of about $2.4 billion, according to its most recent quarterly filing. It warned in its annual report that it may have to file for bankruptcy. Any restructuring is likely to be complicated by the number of assets that are beyond the reach of the company’s creditors.

Comanche, Sanchez’s joint venture with Blackstone Group Inc., is held in an unrestricted subsidiary, while several pipeline assets have been sold to Sanchez midstream.

Shares of Sanchez have fallen 98% in the past year, giving the company a market value of about $9.8 million.

Sanchez, formed in 2011, is run by Chief Executive Officer Tony Sanchez III. Other family members in senior leadership positions include Patricio Sanchez.

Apollo’s energy assets include Caelus Energy Alaska and Chisholm Oil & Gas LLC, according to its website.

--With assistance from Ryan Collins and Allison McNeely.

To contact the reporter on this story:
Kiel Porter in Chicago at kporter17@bloomberg.net

To contact the editors responsible for this story:
Liana Baker at lbaker75@bloomberg.net
Michael Hytha, Josh Friedman