The End Is Near for Riviera Resources

19 October 2020

The board of directors of Riviera Resources has approved the dissolution, winding up, and liquidation of the company and adopted a plan of liquidation and dissolution, under which the Houston-based independent will cease to exist by the end of this year.

The dissolution will mark the end of a 2-year existence for Riviera, which was formed in April 2018 by LINN Energy, then spun off in August of the same year. The company stated that its strategic focus was on efficiently operating what it referred to as its mature, low-decline assets.

On 13 October, Riviera announced the following.

• Approval of a cash distribution to shareholders of $1.35 per share
• Closing of the following sales:
  • Blue Mountain Midstream LLC to Citizen Energy for approximately $111 million
  • Remaining North Louisiana assets for approximately $22 million
  • Interests in certain properties located in the Anadarko Basin in Oklahoma for approximately $13 million

The distribution to shareholders will be paid with the company’s cash on hand and will be payable on or around 27 October to all shareholders as of the close of business on 23 October. As of 12 October, there were 58,170,727 shares outstanding of common stock eligible to receive distributions. Based on the $1.35 per share distribution, the aggregate cash amount of the distribution is expected to be approximately $79 million.

The company has two operating segments—upstream and Blue Mountain.

The upstream properties are primarily located in two US operating regions. The Mid-Continent region includes properties in the Northwest STACK in northwestern Oklahoma and various other oil and natural gas producing properties throughout Oklahoma. Its North Louisiana assets include oil and natural gas properties producing primarily from the Hosston, Cotton Valley Bossier, and Smackover formations.

The Blue Mountain segment comprises a cryogenic natural gas processing facility, a network of gathering pipelines and compressors, produced-water services, and a crude-oil-gathering system, all located in the Merge/SCOOP/STACK play.

In the first quarter of 2020, Riviera completed the sale of its interests in nonoperated properties in the Drunkards Wash field in the Uinta Basin and the Overton and Personville fields in East Texas.

About Liquidation, Dissolution, and Winding Up

There are multiple ways of ending a company’s existence. Liquidation, dissolution, and winding up are different but related terms and actions related to this process.  

• Liquidation is the process of bringing a business to an end by converting its assets to cash and distributing it to claimants. A liquidation plan provides for the sale, lease, or other disposition of all of the company’s assets.
• Dissolution ends a company’s existence as a legal entity. The existence of the company is terminated by filing documents to dissolve the company as a business entity.
• Winding up a company is governed by the business and corporate laws of each state and the company’s governing documents. In this process, the company “winds up” its affairs. While winding up, a company may no longer pursue business as usual. The only action it may attempt is to complete the liquidation and distribution of its assets. At the end of the process, the company is dissolved and ceases to exist.

Winding Up vs. Bankruptcy

Winding up a business is not the same as bankruptcy. In a bankruptcy, creditors attempt to gain access to a company's assets so they can be liquidated to pay off debts. The proceedings can help a company emerge as a new entity that is debt-free and usually smaller.

Conversely, once winding up has begun, a company can no longer pursue business as usual. The only action it may attempt is to complete the liquidation and distribution of its assets.

Riviera Resources has stated that it intends to file a certificate of dissolution with the State of Delaware, at which time its transfer books and records will be closed and its common stock will cease trading. This will occur no later than the close of business on 31 December. The company’s stock was trading at $1.60 per share as of the morning of 19 October.