EnCap-Backed Southland Royalty Files for Bankruptcy, Seeks Sale

Natural gas driller Southland Royalty Company LLC has arranged for $35 million in new-money financing to pay for its Chapter 11 bankruptcy, during which it’ll look for a buyer.

• Southland, which owes about $540 million to lenders via a reserve-based credit facility, will seek to sell itself in bankruptcy or slim down its balance sheet if an attractive buyer can’t be found, Chief Restructuring Officer Frank A. Pometti says in court declaration
• EnCap Investments LP entities own 80% of co. and MorningStar Partners LP owns 20%
• Bankruptcy caused by downturn in energy markets, Pometti says
• Debtor-in-possession loan totaling $70 million ...