Affiliates of Castex Energy, a bankrupt oil-and-gas production company that focused on exploration and development in Louisiana and the Gulf of Mexico, won court approval Monday to shut down the business after unloading its operating assets, WSJ Pro Bankruptcy reported. Judge Marvin Isgur of the U.S. Bankruptcy Court in Houston approved Castex’s chapter 11 plan, which will create a liquidating trust to provide a modest recovery for unsecured creditors and resolve liabilities arising from decommissioning the company’s remaining oil-and-gas wells. The bankruptcy plan was the culmination of agreements between privately owned Castex and various company stakeholders, including its secured lenders owed at least $199.59 million and unsecured creditors owed about $16 million, according to court papers. Houston-based Castex and related corporate affiliates filed for bankruptcy in February, its second time doing so after emerging from an earlier chapter 11 in 2018. Castex blamed the second bankruptcy on a confluence of negative events, including the collapse in oil-and-gas prices last year during the early months of the COVID-19 pandemic, which roiled the energy sector and drove several oil-drilling-and-service companies into chapter 11. Castex sold its properties in the Gulf of Mexico last year to Talos Energy Inc. for $6.5 million in cash and $58.5 million in newly issued Talos stock. Under the liquidation plan, unsecured creditors will have rights to $1.75 million in cash and a portion of the Talos shares. The company in chapter 11 is also transferring its interest in an onshore well to W&T Offshore Inc., court papers say. Judge Isgur said Monday that the “extreme lengths” Castex and its various creditor parties went to strike deals during the chapter 11 will minimize the company’s liabilities and provide at least some recovery for creditors. He praised the lawyers for being able to find a path forward under difficult circumstances.
