Sabine Oil & Gas Corp. won an important court ruling yesterday that will allow the bankrupt energy producer to shed certain pipeline contracts, potentially exposing companies that transport and process gas to the crisis in the energy industry, Reuters reported. The bankruptcy court ruling is the first major test of whether chapter 11 can be used to end a contract with companies in what is known as the midstream sector of the energy industry. "The debtors have satisfied the standard for the rejection of the contracts," said Bankruptcy Judge Shelley Chapman. Her decision can be appealed and is not binding. But it may encourage other struggling producers to follow suit at a time when scores of oil and gas companies are teetering on the brink of bankruptcy. Judge Chapman's decision clears the way for Sabine to seek a new midstream operator to build a pipeline system in southern Texas to replace the existing one built by an affiliate of Cheniere Energy Inc. The company's lawyers have also said they may use the ruling to renegotiate with Cheniere. Sabine said in court papers a new midstream operator would save it $35 million. Read more.
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