Recent Ruling Forces Midstream Service Providers to be More Careful when Entering into Gas Gathering or Related Agreements

Earlier this year, in In re Sabine Oil & Gas Corp., 547 B.R. 66 (S.D.N.Y. 2016), the bankruptcy court for the Southern District of New York permitted a debtor to reject gas gathering and related agreements under § 356(a) of the bankruptcy code. Sabine filed a voluntary petition for Chapter 11 relief in July 2015 and continued to operate as a debtor in possession. Sabine was a party to gas gathering agreements with Nordheim Eagle Ford Gathering, LLC and HPIP Gonzales Holdings, LLC, which were governed by Texas law. More