Sunday, January 11, 2015

WBH Energy Partners LLC in Chapter 11 Bankruptcy

Reuters reported:

WBH Energy, one of many tiny shale oil and gas producers in Texas, has filed for bankruptcy protection, becoming what may be the first U.S. oil company to do so since crude prices started tumbling six months ago. 
The privately held company, based in Austin, has leases in the Barnett Combo Play of the Fort Worth Basin, which mainly produces gas.
Natural gas prices followed crude oil's decline:

The Texas Comptroller of Public Accounts website shows the following governing body members for WBH Energy Partners LLC, all from Austin, Texas:

David R. Henderson
Herodutus Resources
Jacob Warnock
Joseph Warnock
Rand Winfrey
There appear to be two sister companies with the WBH name and registered agent Joe Warnock.  They are WBH Energy GP, LLC and WBH Energy, LP.  Only WBH Energy Partners LLC declared bankruptcy.  It remains to be seen if the bankruptcy spreads to the GP or LP versions of WBH or governing board Herodotus Resources, also owned by David R. Henderson. 

WSJ reported the impact of falling oil prices on The Carlyle Group's fourth quarter:

Falling oil and natural-gas prices took a bite out of Carlyle Group LP’s fourth-quarter performance, showing buyout firms’ vulnerability to the downdraft after big investments in the sector.

The Washington-based private-equity firm said Friday that its older energy funds, primarily those managed by former partner Riverstone Energy Holdings LLC, fell 17% during the quarter, and 12% on the year. Its newer energy funds, which include those it manages as well as its stake in funds run by its new oil-patch partner NGP, lost 8% on the quarter and 13% in all of 2014.

Those losses helped drag down the overall value of funds in which Carlyle and its shareholders earn a slice of the profits.  The firm’s so-called carry funds gained only 1% during the fourth quarter
Carlyle's mortgage backed security fund, Carlyle Capital Corporation, imploded six months before the fall 2008 meltdown.  Carlyle lost Semgroup to bankruptcy in 2008 and Stallion Oilfield Services in 2009.

The PEU boys, ever the salesmen, suggest now is the perfect time for energy investing.   Investor Place stated:

Carlyle is heavily invested in a number of small producers.
BidnessETC added:

Shares of companies like USA Compression Partners LP (NYSE:USAC) and Northern Blizzard Resources, a Calgary-based company. Both companies have lost 32% and 50%, respectively, of their share value during the fourth quarter (for Carlyle and Riverstone).

The joint stake of 10% in SandRidge Energy Inc. (NYSE:SD) held by Carlyle and Riverstone has tumbled 82% in value since June last year.
Ironically, several recent refinery fires might stop the steady drop in gasoline prices.  One happened over the weekend at Carlyle's Philadelphia Energy Solutions refinery.
It remains to be seen if WBH Energy is a harbinger of wider financial pain and if bankruptcies spread to the PEU sector. If the past is a predictor Carlyle's Limited partners in the energy space can expect capital calls.  Generally, where there's smoke there is fire.

The bankruptcy filing can be viewed at the link below:

WBH Chapter Filing