In light of a recent bankruptcy court decision, Partner John P. Melko discussed new risks posed to midstream oil and companies with SNL Financial. The court’s decision to allow bankrupt energy producer Sabine Oil & Gas to drop its gathering and processing contracts could negatively impact the ability of midstream businesses to fulfill their debts and obligations. As a result, midstream companies that foresee G&P contract complications with producers might attempt to push back upcoming debt maturities.
“If that guaranteed revenue stream goes away, [pipeline operators] will be caught with what I call a stranded investment,” said Mr. Melko.
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