A bankruptcy judge gave a green light to Southland Royalty Co. to continue drawing on $70 million in chapter 11 financing that the oil-and-gas business needs to keep operating and to pay its bills, WSJ Pro Bankruptcy reported. Bankruptcy Judge Karen Owens in Wilmington, Del., yesterday approved Southland’s request at a hearing. The Fort Worth, Texas-based company filed for bankruptcy in January, becoming one of the latest energy companies to fall victim to a prolonged period of lower commodity prices weighing on shale drillers. The unsecured creditors' committee last week objected to the proposed financing, but heading into Wednesday’s hearing they had resolved their differences over the matter. The bankruptcy financing includes $35 million in new loans. The rest is a dollar-for-dollar rollup of pre-bankruptcy loans into the chapter 11 financing, a move that further improves the standing of those creditors. The unsecured creditors committee had complained that the financing package “aggressively” restricted its ability to investigate the secured lenders’ liens and claims. The committee had sought, among other things, at least $200,000 to investigate the interests of the secured lenders. Southland’s initial proposed budget offered only $50,000. The committee is now getting up to $100,000. The committee also objected that it wasn’t always getting the same periodic financial reports that the lender group was receiving. The revised financing package spells out that Southland will now provide the committee with, for example, a 13-week budget. Members of the unsecured creditors committee are Halliburton Energy Services Inc., F&S Trucking Inc., Taylor Construction Inc., Terry R. Pitt Construction Inc. and White River Royalties LLC.
