Bankruptcy Court Judge Rules in Favor of Sabine

David Karp, Co-Head of Special Situations & Alternative Investments, explains that a federal bankruptcy court ruling allowing Sabine Oil & Gas Corp. to reject key midstream agreements is limited to contracts tied to produced hydrocarbons rather than mineral interests, leaving some agreements more vulnerable than others.

The decision is raising significant concerns across the energy sector, as it may encourage other distressed producers to terminate similar contracts amid sustained low commodity prices. As similar disputes unfold in other bankruptcy cases, including those involving Magnum Hunter and Quicksilver Resources, the ruling signals growing legal and financial uncertainty for midstream companies and their investors.