© 2015 The Texas Lawbook.
By Staff Reports
(March 9) – U.S. Bankruptcy Judge Shelley Chapman in Manhattan ruled Tuesday that Houston-based Sabine Oil & Gas Corp. can reject contracts with two companies that gather, treat and transport oil and natural gas as part of their Chapter 11 restructuring.
The decision is a huge blow to midstream energy companies, as billions and billions of dollars in contracts they have with exploration and production corporations were previously viewed as untouchable in bankruptcy.
In court papers, Sabine lawyers said the rejection of contracts with HPIP Gonzales Holdings and Nordheim Eagle Ford Gathering would save the E&P company as much as $115 million.
Midstream and upstream companies have long agreed that these contracts are bankruptcy proof because they contain covenants that “attaches to and runs with the land” and thus have certain property or deed rights under Texas law that bind future owners.
Sabine filed for bankruptcy in July and asked the judge to scrap contracts that were “unnecessarily burdensome.”
For more details about this case, visit FuelFix.com.
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