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UNITED STATES BANKRUPTCY COURT

DISTRICT OF MASSACHUSETTS
EASTERN DIVISION
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In re:
)
)
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BUCKINGHAM OIL INTERESTS, INC.
)
)
)
Debtor.
)
)

Chapter 11
Case No.: 15-13441 (JNF)

APPLICATION OF CHAPTER 11 TRUSTEE FOR ENTRY OF AN ORDER

AUTHORIZING THE EMPLOYMENT OF ENERGYNET.COM AS SALES BROKER
AND CONSULTANT NUNC PRO TUNC TO SEPTEMBER 22, 2015
Charles A. Dale III, the duly appointed Chapter 11 trustee for the bankruptcy estate of the
above-captioned debtor (the Chapter 11 Trustee) hereby requests, pursuant to sections 327 and
328 of the Bankruptcy Code, 1 Rule 2014(a) of the Federal Rules of Bankruptcy Procedure (the
Bankruptcy Rules), and Rules 2014-1 and 6005-1 of the Local Bankruptcy Rules for the
United States Bankruptcy Court for the District of Massachusetts (the Local Rules), entry of an
order, substantially in the form attached hereto as Exhibit A, authorizing the Chapter 11 Trustee
to retain and employ EnergyNet.com (EnergyNet), as sales broker and consultant, effective
nunc pro tunc to September 22, 2015, in accordance with the proposed retention agreement
attached hereto as Exhibit B. In support of this Application, the Chapter 11 Trustee submits the
Declaration of Chris Atherton, President of EnergyNet (the Atherton Declaration), which is
attached hereto as Exhibit C. In further support of this Application, the Chapter 11 Trustee
respectfully states as follows:

11 U.S.C. 101 et seq.

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Jurisdiction and Venue

1.

This Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and

1334. This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). Venue is
proper in this Court pursuant to 28 U.S.C. 1408 and 1409.
Background
2.

On September 1, 2015 (the Petition Date), Buckingham Oil Interests, Inc. (the

Debtor) filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code (the
Chapter 11 Case) in the United States Bankruptcy Court for the District of Massachusetts (the
Court).
3.

On the Petition Date, the United States Trustee (the U.S. Trustee) moved, with the

assent of the Debtor, for an order directing the appointment of a Chapter 11 trustee. [Docket No.
2].
4.

On September 1, 2015, the Court entered an order authorizing the United States

Trustee to appoint a Chapter 11 trustee to conduct the Debtors business. [Docket No. 4].
5.

On September 1, 2015, the U.S. Trustee filed the Application for and Certificate of

Appointment of Chapter 11 Trustee, requesting the Courts approval of the appointment of

Charles A. Dale III as Chapter 11 Trustee (the Certificate of Appointment). [Docket No. 5].
6.

On September 15, 2015, the Court entered an order approving the appointment of the

Chapter 11 Trustee. [Docket No. 19].

7.

The Debtor is in the business of oil and gas exploration and development. The Debtor

was incorporated in Texas, but its headquarters are located in Falmouth, Massachusetts. Since at
least 2005, the Debtor has acquired working interests in approximately 100 prospects in
eleven (11) different states, including Texas and Louisiana. Within each prospect, the Debtors

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operating partners (known as operators) may drill several wells in an effort to discover oil that
can be produced in commercial quantities.
8.

Although the Chapter 11 Trustee has not concluded his review, it appears that the

Debtor owns a working interest in as many as 300 individual wells.

Relief Requested
9.

The Debtors primary assets consist of various working interests and royalty interests

in oil and gas properties, which require continued financial support to conduct oil and gas
exploration. The Chapter 11 Trustee has decided, as a matter of his business judgment, to
initiate a sale process that will efficiently monetize and transfer these assets to buyers who can
provide such ongoing financial support, provided that a reorganization plan does not materialize
in the interim. 2 Based upon his consultations with his partners regularly representing clients in
the oil and gas industry, the Chapter 11 Trustee has selected EnergyNet to assist him with the
sale of the Debtors oil and gas interests. By this Application, the Chapter 11 Trustee
respectfully requests that the Court approve the employment of EnergyNet as his sale broker and
consultant.
EnergyNets Qualifications
10.

The Chapter 11 Trustee has selected EnergyNet because of the firms experience and

extensive knowledge in the field of sales brokerage and consulting regarding oil and gas
divestitures. EnergyNets market focus, experience, and reputation affords it with specific

Based on initial discussions with several pre-petition investors, there appears to be significant
interest in a reorganization plan that would be supported by additional capital investment from
such investors. The Chapter 11 Trustee is actively pursuing these discussions. If a plan
materializes from these discussions, the Chapter 11 Trustee may elect not to sell certain assets
through EnergyNet.
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knowledge and market access, which will greatly assist the Chapter 11 Trustee in maximizing
value for the oil and gas assets pursuant to a Court-approved process.
11.

As discussed further in the Atherton Declaration, EnergyNet is a widely-known,

reputable, and professional firm that specializes in oil and gas marketing and divestitures,
including the preparation, evaluation, analysis, marketing, negotiating, and closing of oil and gas
property sales. EnergyNet conducts efficient oil and gas auction, sealed bid, and negotiated sale
services that facilitate transactions of producing working interests (operated and non-operated),
overrides, royalties, mineral interests, and non-producing leaseholds. EnergyNet is unique in its
approach, as the bulk of its sales solicitations and auctions are conducted online. EnergyNets
technological reach presents an oil and gas property portfolio to thousands of potential buyers
with multi-billion-dollar buying power and allows buyers the flexibility and convenience of
conducting their acquisition and divestment activities online.
12.

EnergyNet has marketed and sold assets through their auction process in the following

bankruptcy cases: (i) In re Exterra Energy, Inc., Case No. 11-46956 (Bankr. N.D. Tex.); (ii) In re
Shale Synergy, LLC, Case No. 10-31683 (Bankr. N.D. Tex.); (iii) In re Energytec, Inc., Case No.
09-41477 (Bankr. E.D. Tex.); (iv) In re Houston Petroleum Co., Case No. 08-31769 (Bankr. S.D.
Tex.); (v) In re Lexington Oil and Gas Ltd., Co., Case No. 0880228 (Bankr. E.D. Okla.); and (vi)
In re L-Texx Petroleum, LP, Case No. 07-10217 (Bankr. E.D. Tex.).
Services to be Rendered
13.

The Chapter 11 Trustee anticipates that EnergyNet may assist the Chapter 11 Trustee

in the sale process from initiation to through closing and, subject to direction from the Chapter
11 Trustee, EnergyNets services may include the following:
a)

assist Chapter 11 Trustee with analyzing properties for divestiture and develop a
marketing strategy designed to achieve Chapter 11 Trustees goals;
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b)

identify, collect and organize information needed to prepare offering materials;

c)

facilitate, to the degree desired for sale presentation by Chapter 11 Trustee,

internal and third party coordination to finalize engineering, including evaluation
of upside value;

d)

establish timeline goals and identify sale issues;

e)

advise on market value estimates based on final engineering and price and timing
assumptions;

f)

finalize marketing materials and information memorandum and organize data for
marketing and internet or other data room presentation;

g)

distribute teasers or publish select advertising (website, EnergyNet Online Market

Report) for broad market exposure and personally contact, as practical, select
recipients to gauge interest level and ensure offering attention;

h)

handle negotiation and execution of confidentiality agreements;

i)

manage buyer activity throughout marketing and assist with buyer data needs;

j)

receive bids and advise on bid evaluations;

k)

facilitate negotiation of bids to the extent desired by Chapter 11 Trustee; and

l)

provide buyer due diligence and closing support as requested by Chapter 11

Trustee.

In accordance with Local Rule 6005-1(b), a copy of the proposed services agreement

with EnergyNet is attached as Exhibit B (the Agreement).

15.

The Chapter 11 Trustee needs assistance in marketing and selling the Debtors oil and

gas interests. EnergyNet is a reputable firm that has considerable experience rendering such
services, including in the context of bankruptcy proceedings. As such, EnergyNet is qualified to
perform the work required in this case.
Professional Compensation
16.

As provided in the Agreement, EnergNet shall be entitled to a commission based on

aggregate net sales prices at closing. At the closing of any sale, or any portion thereof,
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EnergyNet will received a fee of 3.5% on net sales price, with no additional fees, retainers, or
sales tax.
17.

EnergyNets general expertise and experience, its knowledge of gas and oil markets,

and its other capabilities will inure to the benefit of the Chapter 11 Trustee, and accordingly, the
compensation structure is reasonable regardless of the number of hours to be expended by
EnergyNet professionals in the performance of services to be provided under the Agreement.
Nonetheless, the compensation structure takes into consideration EnergyNets anticipation that it
will need to continue to provide a substantial commitment of professional time and effort in
order to perform its duties under the Agreement.
18.

In addition, given the numerous issues that EnergyNet may be required to address in

performance of the services hereunder, EnergyNets commitment to the variable level of time
and effort necessary to address all such issues as they arise, and the market for EnergyNets
services for engagements of this nature in an out-of-court context, the Chapter 11 Trustee
believes that the fee arrangements set forth in the Agreement are reasonable under the standards
set forth in section 328(a) of the Bankruptcy Code.
19.

As set forth in the Agreement, EnergyNet will file with the Court a final fee

application for allowance of its compensation with respect to services rendered in accordance
with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules, and
the guidelines for compensation and reimbursement of expenses established by the U.S. Trustee.
EnergyNet understands that interim and final fee awards are subject to approval by this Court.
Consistent with its ordinary practice and the practice of other similar entities in other chapter 11
cases whose fee arrangements are not hours-based, however, EnergyNet does not maintain
contemporaneous time records or provide or conform to a schedule of hourly rates for its
professionals. Accordingly, the Chapter 11 Trustee requests that notwithstanding anything to the
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contrary in the Bankruptcy Code, the Bankruptcy Rules, the U.S. Trustee Guidelines, and Local
Rule 2016-2, EnergyNets professionals be excused from recording time records for its
professionals in this matter.
20.

EnergyNet has not shared or agreed to share any compensation to be paid by the

Trustee with any other person, other than other principals and employees of EnergyNet, in
accordance with section 504 of the Bankruptcy Code.
21.

The Chapter 11 Trustee is still investigating the viability of a reorganization of the

Debtors affairs under a chapter 11 plan. Therefore, the Chapter 11 Trustee has negotiated the
ability to terminate this engagement if, as a matter of business judgment, he decides to pursue a
reorganization as opposed to a sale of assets. If the Agreement is terminated as a result of such a
decision, EnergyNet will be entitled to a termination fee ranging from $10,000.00 to $50,000.00,
depending on the proximity to deadlines for submitting bids as set forth in the Agreement.
22.

Based on the Chapter 11 Trustees review of similar engagements, and as set forth in

the Atherton Declaration, the compensation structure described in the Agreement is comparable
to similar engagements, both in and out of court.
Indemnification
23.

As set forth in the Agreement, the Chapter 11 Trustee has agreed to indemnify

EnergyNet and its affiliates and each of their respective officers, directors, managers, members,
partners, employees and agents, and controlling persons under certain circumstances. The
Chapter 11 Trustee will not be responsible for indemnifying EnergyNet for any liability to the
extent such liability is found in a final judgment by a court of competent jurisdiction to have
resulted primarily from EnergyNets gross negligence or willful misconduct in the performance
of its duties under the Agreement.

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The Agreement contains standard indemnification terms, both in chapter 11 cases and

outside chapter 11, and reflects the qualifications and limits on such terms that are customary for
EnergyNet and other similar professionals. The Agreement was negotiated between the Chapter
11 Trustee and EnergyNet at arms lengths and the Chapter 11 Trustee respectfully submits that
the indemnification provisions are reasonable. See, e.g., In re United Artists Theatre Co., 315
F.3d 217 (3d Cir. 2003).
Disinterestedness of Professionals
25.

As set forth in more detail in the Atherton Declaration, Mr. Atherton represents that

EnergyNet : (i) is a disinterested person (as that term is defined in section 101(14) of the
Bankruptcy Code); and (ii) does not hold or represent an interest adverse to the interests of the
estate with respect to the matters on which EnergyNet will be employed. Based on the Atherton
Declaration, the Chapter 11 Trustee believes that EnergyNet satisfies the standards for
employment under section 327(a) of the Bankruptcy Code.
Notice
26.

Notice of this Application has been provided to: (a) the Office of the United States

Trustee for the District of Massachusetts; (b) counsel to the Debtor; (c) counsel to First
Financial; (d) the creditors holding the twenty (20) largest claims against the Debtors estate; 3 (e)
the Securities and Exchange Commission; and (f) any other parties requesting notice.
27.

No previous request for the relief sought herein has been made to this or any other

Court.

On September 17, 2015, the Chapter 11 Trustee filed a List of Top 20 Unsecured Creditors
[Docket No. 23]. In addition to the creditors on such list, the Chapter 11 Trustee will continue to
serve certain additional parties who had been previously considered by Debtors counsel for
potential inclusion thereon.
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WHEREFORE, the Chapter 11 Trustee respectfully request that the Court enter an Order,
substantially in the form attached hereto as Exhibit A, (i) granting this Application , (ii)
authorizing the Trustee to retain and employ EnergyNet as its sales broker and consultants for
the purposes and under the terms and conditions set forth above, and (iii) granting to the Chapter
11 Trustee such other and further relief as the Court deems just.

Dated: September 22, 2015

Respectfully submitted,
CHARLES A. DALE III,
CHAPTER 11 TRUSTEE
By his proposed counsel,
/s/ Mackenzie L. Shea
Mackenzie L. Shea (BBO No. 666241)
David A. Mawhinney (BBO No. 681737)
K&L Gates LLP
State Street Financial Center
One Lincoln Street
Boston, Massachusetts 02111
Tel: (617) 261-3100
Fax: (617) 261-3175
E-mail:
mackenzie.shea@klgates.com
david.mawhinney@klgates.com
Proposed counsel to the Chapter 11 Trustee

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