From: mark.taylor@enron.com
To: carol.clair@enron.com
Date: 1999-10-04 15:45:00+00:00
Subject: Forcenergy Asset Sale

---------------------- Forwarded by Mark E Taylor/HOU/ECT on 10/04/99 03:44 
PM ---------------------------


rantonof@cwt.com on 10/04/99 09:20:31 AM
To: Lisa Mellencamp/HOU/ECT@ECT, Mark E Taylor/HOU/ECT@ECT, Rod 
Nelson/HOU/ECT@ECT, Fred Lagrasta/HOU/ECT@ECT
cc:  
Subject: Forcenergy Asset Sale





FYI
Below is a report on the Forcenergy bankruptcy case I received this morning.

Forcenergy Seeks OK For Asset Sale, Bidding Procedures
Forcenergy Inc. has asked the court to authorize the sale of seven
oil and gas properties to Hilcorp Energy I L.P. as well as procedures
designed to draw competing bids for the assets through an auction.
The motion, filed Sept. 13 with the U.S. Bankruptcy
Court in New Orleans, requests permission to sell five
Louisiana and two Texas properties and related assets to
Hilcorp, subject to better offers. Hilcorp has offered
Forcenergy $6,086,000 in cash for the properties.
Sierra Mineral Development L.C. indicated interest
in purchasing the Texas and Louisiana properties in late
1998. In March, one month after signing a letter of interest
with Sierra, Forcenergy filed for Chapter 11 relief. Hilcorp
then agreed to finance Sierra?s purchase of the Forcenergy
properties. Any purchase agreement will list only the
names of Forcenergy and Hilcorp.
The terms of the agreement include Hilcorp?s
responsibility to "assume all liabilities related to the Property
after the Effective Date, and all Plugging and Abandonment
Obligations and Environmental Obligations, if any,
regardless of when incurred," the filing reports.
Forcenergy claims that this is a fortuitous time for
the approval of the sale due to the current stable cash flow,
the production of its onshore properties, and the potential
for sustained growth in its offshore Gulf of Mexico drilling
facilities.
The oil and gas explorer and producer also
requested the approval of overbid procedures, recognizing
that new interest in Forcenergy?s properties may come
after other interested parties review the purchase agreement.
Any person submitting an overbid to counsel for
the creditors? committee, Hilcorp, Forcenergy, and the
Bank Group is subject to offering a price of no less than
$6,236,000 and the elimination of any break up expense
reimbursement.
Competing bidders for the assets must submit a
deposit equal to 10% of its bid plus evidence that it is able
to consummate the transaction.

After the last overbid, the court will allow Hilcorp
the opportunity to overbid by an additional $50,000. Any
further bidding will continue in $50,000 increments.
If the court approves the purchase of the properties
by a bidder other than Hilcorp, Forcenergy would pay up
to the $100,000 that Hilcorp estimates it will incur as its
costs and fees related to the sale. If a break-up expense
reimbursement becomes necessary, Hilcorp will provide
documentation of expenses to the court.
Forcenergy also asked the court to approve its list
and calculation of amounts to be paid to cure all of its pre-petition
defaults.
"If no amount is listed, the Debtor believes that
there is no Pre-Petition Cure Amount due and owing to that
party," the motion states.
"The Debtor requests that, unless a party files an
objection to the Pre-Petition Cure Amount so scheduled
and serves a copy on Debtor?s counsel by the time to be
fixed by the Court at the Procedures Hearing, such party
should be forever barred from objecting to the Pre-Petition
Cure Amount," the filing further contends.
The company?s revenues declined after a decrease
in gas and oil prices in late 1998 and early 1999. The
declining revenues also negatively impacted the company
after 1997 and 1998 acquisitions outlays.
The court has not yet set a hearing date on the
bidding procedures request. DBR
---- end ----



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