TXCO Resources, Inc. | Case Study | FTI Consulting

TXCO Resources, Inc.

Recovery for all secured and unsecured lenders

Corporate Finance & Restructuring

October 28, 2013

TXCO Resources (TXCO) was an independent energy company, based in San Antonio, Texas, engaged in the exploration, development and production of oil and natural gas properties.

Volatile energy prices and the global economic slowdown made it difficult for the company to raise debt and equity capital. Additionally, the company’s development commitments and capital budget requirements caused a liquidity shortage, making it difficult for the company to honor financial obligations.

TXCO retained FTI Consulting in 2009 as Chief Restructuring Officer and financial advisor to provide assistance with strategic alternatives, interim financing, cash management, creditor negotiations, advisory services and execution of all reporting requirements.

The outcome was a single asset sale of approximately 90 percent of TXCO’s assets, resulting in a 100 percent recovery of debt owed to all secured and unsecured lenders.


Our inability to reach accommodations with our vendors regarding the timing of payment in light of our limited liquidity resulted in liens filed against our properties and withdrawal of trade credit by certain vendors, which, in turn, limits our ability to conduct operations on properties.

– TXCO Quarterly Report, 6/30/09

Founded in 1979, the independent oil and gas enterprise TXCO Resources had operations interests in Texas, as well as in Oklahoma, Louisiana, Montana, North Dakota and South Dakota. As of the end of 2008, TXCO had estimated net proved reserves of 81.7 billion cubic feet of gas equivalent.

But the volatility in energy and the tight credit markets due to the economic slowdown adversely affected the company’s ability to raise capital. All attempts proved futile. The company was unable to improve liquidity through short- and long-term bank borrowings, issuance of debt instruments, sale of common stock and preferred stock, sale of non-strategic assets, joint venture financing and restructuring of existing obligations.

As a result, TXCO couldn’t meet short-term cash needs, including lender and vendor commitments.

The lenders under the senior credit agreement issued a notice of the acceleration of the amounts, and the company filed for Chapter 11 bankruptcy on May 17, 2009, seeking debtor-in-possession financing of up to $32 million.

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