Sabine Oil & Gas May Reject Pipeline Contracts

David Karp, Co-Head of Special Situations & Alternative Investments, explains that a bankruptcy court ruling allowing Sabine Oil & Gas Corp. to reject costly pipeline agreements signals a major shift in how energy contracts may be treated in restructuring.

The decision, which rejected arguments that such agreements are protected as property interests, could enable more distressed producers to use bankruptcy to exit burdensome midstream deals entered during stronger market conditions. As a result, the ruling raises significant legal and financial risks for pipeline and midstream companies, whose long-term contracts may no longer provide the stability they once assumed.

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