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Case Studies

Fieldwood Energy


Adobe Stock 276242207


  • Chi­ron advised our Client which pro­vid­ed sure­ty bonds to insure plug­ging and aban­don­ment (P&A) oblig­a­tions for Field­wood Ener­gy LLC (the Com­pa­ny”)
  • The Com­pa­ny was one of the largest oil and gas pro­duc­ers in the Gulf of Mex­i­co (GOM) and filed Chap­ter 11 in August 2020 due to over­whelm­ing debt in a low oil and gas price environment
  • The Com­pa­ny was a com­plex estate with many cred­i­tor class­es. The Company’s thou­sands of oper­at­ed and non-oper­at­ed wells spread through­out the GOM, were a result of var­i­ous acqui­si­tions and were held in many sub­sidiaries. Many of the wells and struc­tures have com­pli­cat­ed over­lap­ping frac­tion­al inter­ests owned by oth­er producers
  • P&A lia­bil­i­ties on off­shore prop­er­ties tra­di­tion­al­ly accrue first to the cur­rent oper­a­tor (the Com­pa­ny) and then to P&A bond­ing providers and then to pre­vi­ous own­ers in the chain of title
  • Chiron’s Trans­ac­tion­al Advi­so­ry Scope:
    • Ana­lyze and assess the Client’s poten­tial pay­out risk on bond­ed prop­er­ties based on the Company’s finan­cial con­di­tion, includ­ing petro­le­um engi­neer­ing review, P&A cost review, and finan­cial modeling
    • Chiron’s trans­ac­tion­al work includ­ed devel­op­ing and run­ning var­i­ous finan­cial sce­nar­ios with dif­fer­ent prod­uct pric­ing and P&A costs to deter­mine a range of poten­tial bond­ing pay­out exposures
    • Devel­op, togeth­er with Client’s bank­rupt­cy coun­sel, strate­gies to mit­i­gate bond­ing expo­sure if possible
  • Despite improved prices and vol­umes, many stake­hold­ers con­sent­ed to the Company’s plan to cher­ry-pick” properties
  • The Company’s plan of reor­ga­ni­za­tion became effec­tive August 2021
  • Under a key part of the plan, the Com­pa­ny was able to com­plete­ly dis­own” cho­sen sub-eco­nom­ic assets and their P&A lia­bil­i­ties, putting these oblig­a­tions to the bond­ing providers and pre­vi­ous own­ers. This P&A cost will like­ly exceed hun­dreds of mil­lions of dollars

Chi­ron was knowl­edge­able and effec­tive in assist­ing my client in assess­ing pro­duc­tion, cred­it risks and alter­na­tives in the Field­wood Ener­gy LLC bank­rupt­cy pro­ceed­ing.” — Elliot Schar­fen­berg, Part­ner at Krebs Far­ley & Dry

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The Challenge

Fieldwood Energy LLC was one of the largest oil and gas producers in the Gulf of Mexico (GOM) and filed Chapter 11 in August 2020 due to overwhelming debt in a low oil and gas price environment.

The Chiron Solution

Develop, together with Client’s bankruptcy counsel, strategies to mitigate bonding exposure if possible.

The Result

Under a key part of the plan, the Company was able to completely “disown” chosen sub-economic assets and their P&A liabilities, putting these obligations to the bonding providers and previous owners. This P&A cost will likely exceed hundreds of millions of dollars.

Is your com­pa­ny per­form­ing like it should?