Federal bankruptcy judge allows Okla.-based Boom Drilling to use

Journal Record, The (Oklahoma City), Sep 25, 2008 by Marie Price

A federal bankruptcy judge issued an order Wednesday allowing Woodward-based Boom Drilling to use cash collateral to continue operations and pay expenses on an interim basis through Oct. 9, pending a final hearing on the company's motion.

Boom and three affiliated companies filed for Chapter 11 protection on Sept. 8.

In an emergency motion to the court, Boom outlined projected total expenses of almost $5.7 million for the period from Sept. 8 through Nov. 2, plus about $1.5 million in rig-related expenses. The company projected income over the eight-week period at about $8 million.

About $4.4 million of the company's projected expenses are listed as employee related.

"The debtor's ability to maintain its operations, successfully reorganize its financial affairs, and eventually repay its secured and unsecured creditors, depends upon the debtor's ability to use the cash collateral," the drilling company said in a recent filing.

Boom Drilling has between $86 million and $97 million in liabilities and, according to company's attorney, is currently valued at between $120 million and $140 million.

Boom told the court that it owes the Internal Revenue Service about $3.7 million, and that the IRS has filed notices of tax liens on its property.

Laurus Master Fund Ltd., the company's largest creditor with a claim of almost $79.6 million, is claiming a security interest in Boom's accounts receivable from drilling rigs, which the company disputes.

International Bank of Commerce asserts a secured claim of about $381,000.

Laurus, the IRS and IBC consented to the use of cash collateral by Boom, which will also make reports to the three creditors and take certain actions to adequately protect lienholders' interests.

The bankruptcy cases of Boom Drilling, Boomer Mud Pump LLC, J&J Air Drilling Inc. and Rocket Companies LLC are being jointly administered. Most of the companies' business is centered in Boom Drilling.

The claim by Laurus Master Fund was for acquisition of equipment such as oil rigs and for refinancing other equipment.

In its reorganization filings, Boom Drilling listed about 144 total creditors.

Attorney Stephen Moriarty has said the company is hopeful it can successfully emerge from reorganization within nine months or so.