Case Document 120 Filed in TXSB on 06/20/16 Page 1 of 11 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

Transcription

1 Case Document 120 Filed in TXSB on 06/20/16 Page 1 of 11 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS In re: ) Chapter 11 ) LINC USA GP, et al. 1 ) Case No (DRJ) ) Debtors. ) (Jointly Administered) DEBTORS APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF BRACEWELL LLP AS ATTORNEYS FOR THE DEBTORS AND DEBTORS IN POSSESSION NUNC PRO TUNC TO THE PETITION DATE A HEARING WILL BE CONDUCTED ON THIS MATTER ON JULY 11, 2016 AT 1:00 P.M. IN COURTROOM 400, 4TH FLOOR, UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS, 515 RUSK AVENUE, HOUSTON, TEXAS IF YOU OBJECT TO THE RELIEF REQUESTED, YOU MUST RESPOND IN WRITING, SPECIFICALLY ANSWERING EACH PARAGRAPH OF THIS PLEADING. UNLESS OTHERWISE DIRECTED BY THE COURT, YOU MUST FILE YOUR RESPONSE WITH THE CLERK OF THE BANKRUPTCY COURT WITHIN TWENTY-ONE DAYS FROM THE DATE YOU WERE SERVED WITH THIS PLEADING. YOU MUST SERVE A COPY OF YOUR RESPONSE ON THE PERSON WHO SENT YOU THE NOTICE; OTHERWISE, THE COURT MAY TREAT THE PLEADING AS UNOPPOSED AND GRANT THE RELIEF REQUESTED. Linc USA GP, et al., the above-captioned debtors and debtors in possession (together, the Debtors ), hereby move for entry of an order, substantially in the form filed herewith, authorizing the Debtors to retain and employ Bracewell LLP ( Bracewell ) as their attorneys nunc pro tunc to the Petition Date (as defined herein). In support of this Application, the Debtors rely upon and incorporate by reference: (a) the Declaration of Jason G. Cohen, a partner at Bracewell (the Cohen Declaration ), attached hereto as Exhibit A; (b) the Statement of Bracewell LLP Pursuant to 11 U.S.C. 329, Fed. R. Bankr. P. 2016, and Bankr. S.D. Tex. L.R. 1 The Debtors in these chapter cases, along with the last four digits of each Debtor s federal tax identification number, are: Linc Energy Finance (USA), Inc. (6684); Linc USA GP (5234); Linc Energy Resources, Inc. (9613); Linc Gulf Coast Petroleum, Inc. (6790); Linc Energy Petroleum (Louisiana), LLC (1074); Linc Alaska Resources, LLC (2362); Paen Insula Holdings, LLC (1681); Linc Energy Petroleum (Wyoming), Inc. (9859); Diasu Holdings, LLC (9626); Diasu Oil & Gas Company, Inc. (8926); and Linc Energy Operations, Inc. (5806).

2 Case Document 120 Filed in TXSB on 06/20/16 Page 2 of (the Rule 2016 Statement ), attached hereto as Exhibit B, and the Declaration of Gerald Agranoff (the Agranoff Declaration ), attached hereto as Exhibit C. In further support of this Application, the Debtors respectfully represent as follows: I. JURISDICTION 1. The United States Bankruptcy Court for the Southern District of Texas (the Court ) has jurisdiction over this matter pursuant to 28 U.S.C. 157 and This matter is a core proceeding within the meaning of 28 U.S.C. 157(b)(2). 2. Venue in this Court is proper pursuant to 28 U.S.C and The bases for the relief requested herein are 327(a) and 330 of title 11 of the United States Code (the Bankruptcy Code ), Rules 2014(a) and 2016 of the Federal Rules of Bankruptcy Procedure (the Bankruptcy Rules ) and Rules and of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the Southern District of Texas (the Local Rules ). II. BACKGROUND 4. Together, the Debtors operate an oil and gas exploration and production business with a primary focus on the Texas Gulf Coast. Each of the Debtors is a direct or indirect subsidiary of Linc USA GP. Each of the Debtors is based in Houston, Texas. The Debtors properties are operated by Debtor Linc Energy Operations, Inc. ( LEO ). 5. On May 29, 2016 (the Petition Date ), each of the Debtors filed a voluntary petition for relief under chapter 11 of the Bankruptcy Code. 6. A full description of the Debtors' business, corporate structure, prepetition indebtedness, and events leading to these chapter 11 cases is set forth in the Declaration of Jude Rolfes in Support of Chapter 11 Petitions and First Day Pleadings, [Dkt. No. 14] (the First Day Declaration ), filed on the Petition Date and incorporated herein by reference.

3 Case Document 120 Filed in TXSB on 06/20/16 Page 3 of The Debtors are operating their business and managing their properties as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. III. RELIEF REQUESTED 8. By this Application, the Debtors request entry of an Order authorizing the Debtors to employ and retain Bracewell as their attorneys in these chapter 11 cases, effective nunc pro tunc to the Petition Date, in accordance with the terms and conditions set forth in that certain engagement letter between the Debtors and Bracewell dated as of March 29, 2016 (the Engagement Letter ). IV. BRACEWELL S QUALIFICATIONS 9. The Debtors seek to retain Bracewell because of Bracewell s recognized expertise and extensive experience and knowledge in the field of debtors protections, creditors rights and business reorganizations under chapter 11 of the Bankruptcy Code. 10. Bracewell is currently and has been actively involved in major chapter 11 cases and has represented debtors in many cases, including most recently: In re Venoco, Inc., No (KG) (Bankr. D. Del. March 18, 2016); In re Energy & Exploration Partners, Inc., et al., No (RFN) (Bankr. N.D. Tex. Dec. 7, 2015); In re WBH Energy, LP, No (HCM) (Bankr. W.D. Tex. Jan. 4, 2015); In re Optim Energy, LLC, No (BLS) (Bankr. D. Del. Feb. 12, 2014); In re TMT Procurement Corp., No (MI) (Bankr. S.D. Tex. Jul. 18, 2013); In re KIT Digital, Inc., No (REG) (Bankr. S.D.N.Y. Jun. 11, 2013); In re Marco Polo Seatrade B.V., No (JMP) (Bankr. S.D.N.Y. Jul. 29, 2011); In re Omega Navigation Enterprises, Inc., No (LMC) (Bankr. S.D. Tex. Jul. 8, 2011). 11. In addition, Bracewell lawyers have represented the Debtors in a variety of matters, including corporate, financial and securities matters, and therefore Bracewell has extensive and unique knowledge and familiarity with the Debtors business, assets and legal

4 Case Document 120 Filed in TXSB on 06/20/16 Page 4 of 11 obligations and many of the potential legal issues that may arise in the context of these chapter 11 cases. Moreover, Bracewell has vast experience and a well-known reputation for excellence in the energy sector. Accordingly, the Debtors believe that Bracewell is both well-qualified and uniquely able to represent the Debtors in these chapter 11 cases in an efficient and timely manner. A. Services to be Rendered 12. Subject to further order of the Court, the Debtors request the retention and employment of Bracewell to render, without limitation, the following legal services: a. Advising the Debtors with respect to their powers and duties as debtors in possession in the continued management and operation of their business and properties; b. Advising and consulting on the conduct of these chapter 11 cases, including all of the legal and administrative requirements of operating in chapter 11; c. Attending and negotiating with representatives of creditors and other parties-in-interest; d. Taking all necessary actions to protect and preserve the Debtors estates, including prosecuting actions on the Debtors behalf, defending any action commenced against the Debtors, and representing the Debtors in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the Debtors estates; e. Preparing pleadings in connection with these chapter 11 cases, including motions, applications, answers, orders, reports, and papers necessary or otherwise beneficial to the administration of the Debtors estates; f. Representing the Debtors in connection with obtaining authority to continue using cash collateral and postpetition financing; g. Advising the Debtors in connection with any potential sale of assets; h. Appearing before the Court and any appellate courts to represent the interests of the Debtors estates; i. Advising the Debtors regarding tax matters;

5 Case Document 120 Filed in TXSB on 06/20/16 Page 5 of 11 j. Taking any necessary action on behalf of the Debtors to negotiate, prepare, and obtain approval of a disclosure statement and confirmation of a chapter 11 plan and all documents related thereto; and k. Performing all other necessary legal services for the Debtors in connection with the prosecution of these chapter 11 cases, including (i) analyzing the Debtors leases and contracts and the assumption and assignment thereof; (ii) analyzing the validity of liens against the Debtors; and (iii) advising the Debtors on corporate and litigation matters. B. Professional Compensation 13. Bracewell intends to apply for compensation for professional services rendered and reimbursement of expenses incurred in connection with these chapter 11 cases, subject to the Court s approval and in compliance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and any other applicable procedures or orders of the Court. The hourly rates and corresponding rate structure Bracewell will use in these chapter 11 cases are the same as the hourly rates and corresponding rate structure that Bracewell uses in other restructuring matters, as well as similar complex corporate, securities, and litigation matters whether in court or otherwise, regardless of whether a fee application is required. These rates and the rate structure reflect that such restructuring and other complex matters typically are national in scope and involve great intricacy, high stakes, and severe time pressures. 14. Bracewell operates in a national marketplace for legal services in which rates are driven by multiple factors relating to the individual lawyer, his or her area of specialization, the firm s expertise, performance, reputation, the nature of the work involved, and other factors. follows: 15. Bracewell s hourly rates for matters related to these chapter 11 cases range as

6 Case Document 120 Filed in TXSB on 06/20/16 Page 6 of 11 Billing Category Range Partners $ $1, Associates $ $ Paraprofessionals $ $ The following professionals presently are expected to have primary responsibility for providing restructuring services to the Debtors: William A. (Trey) Wood III ($840.00) and Jason Cohen ($675.00). In addition, as necessary, other Bracewell professionals and paraprofessionals will provide services to the Debtors. 17. Bracewell s hourly rates are set at a level designed to compensate Bracewell fairly for the work of its attorneys and paraprofessionals and to cover fixed and routine expenses. Hourly rates vary with the experience and seniority of the individuals assigned. These hourly rates are subject to periodic adjustments to reflect economic and other conditions. 18. In addition to its hourly rates, it is Bracewell s policy to charge its clients in all areas of practice for identifiable, non-overhead expenses incurred in connection with the client s case that would not have been incurred except for representation of that particular client. It is also Bracewell s policy to charge its clients only the amount actually incurred by Bracewell in connection with such items. Examples of such expenses include postage, overnight mail, courier delivery, transportation, overtime expenses, computer-assisted legal research, photocopying, airfare and lodging. Bracewell will charge no more than $0.20 per page for standard duplication services in these chapter 11 cases. Bracewell does not charge its clients for facsimile transmissions. 19. To ensure compliance with all applicable deadlines in these chapter 11 cases, Bracewell may utilize the services of overtime secretaries. Bracewell will bill the Debtors for overtime secretarial charges that arise out of business necessity.

7 Case Document 120 Filed in TXSB on 06/20/16 Page 7 of 11 C. Compensation Received by Bracewell From the Debtors 20. During the ninety (90) days before the Petition Date, Bracewell received an aggregate of $312, for services rendered to the Debtors, including in connection with potential out-of-court restructuring transactions and commencement of these chapter 11 cases (including the retainer, described below). 21. On March 15, 2016, the Debtors paid a $200, retainer to Bracewell, which was maintained in Bracewell s operating account. As of the Petition Date, the Debtors do not believe that they owe Bracewell any amounts for legal services rendered before the Petition Date, although certain expenses and fees may have been incurred by Bracewell but not yet applied to Bracewell s retainer. Such amounts, if any, would be less than the balance of Bracewell s retainer as of the Petition Date. Bracewell expects to: (a) complete its reconciliation of prepetition fees and expenses actually incurred through the Petition Date no later than the filing of its first interim fee application in these cases; (b) make a corresponding adjustment to the amount of the retainer on or about that date; and (c) disclose such adjustment in its first interim fee application. Bracewell will not apply any portion of the retainer to fees and expenses incurred from and after the Petition Date unless and until authorized to do so by a further order of this Court. 22. Pursuant to Bankruptcy Rule 2016(b), Bracewell has not shared nor agreed to share (a) any compensation it has received or may receive with another party or person, other than the partners, associates, and contract attorneys associated with Bracewell or (b) any compensation another person or party has received or may receive. D. Statement Regarding U.S. Trustee Guidelines 23. Bracewell has agreed to comply with the U.S. Trustee s request for information and additional disclosures as set forth in the U.S. Trustee Guidelines, both in connection with

8 Case Document 120 Filed in TXSB on 06/20/16 Page 8 of 11 this Application and in the interim and final fee applications to be filed by Bracewell in these chapter 11 cases. 24. The following information is provided in response to the request for additional information set forth in Paragraph D.1 of the U.S. Trustee Guidelines: Question: Response: Question: Response: Question: Response: Question: Response: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? No. Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? No. If you represented the client in the 12 months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed postpetition, explain the difference and the reasons for the difference. As disclosed above, Bracewell represented the Debtors during the 12-month period prior to the Petition Date. During this time period, Bracewell charged its standard rates, subject to the customary annual rate increase as of November 1, The billing rates and financial terms have not changed postpetition. Has your client approved your prospective budget and staffing plan, and, if so, for what budget period. Yes, the staffing plan and budget have been approved through August 27, E. Bracewell s Disinterestedness 25. To the best of the Debtors knowledge and as disclosed herein and in the Cohen Declaration, (a) Bracewell is a disinterested person within the meaning of 101(14) of the Bankruptcy Code, as required by 327(a) of the Bankruptcy Code, and does not hold or represent an interest adverse to the Debtors estates and (b) Bracewell has no connection to the

9 Case Document 120 Filed in TXSB on 06/20/16 Page 9 of 11 Debtors, their creditors, or other parties-in-interest, except as may be disclosed in the Cohen Declaration. 26. Bracewell will review its files periodically during the pendency of these chapter 11 cases to ensure that no conflicts or other disqualifying circumstances exist or arise. If any new relevant facts or relationships are discovered or arise, Bracewell will use reasonable efforts to identify such further developments and will promptly file a supplemental declaration as required by Bankruptcy Rule 2014(a). V. SUPPORTING AUTHORITY 27. The Debtors seek retention of Bracewell as their attorneys pursuant to 327(a) of the Bankruptcy Code, which provides that a debtor, subject to Court approval: 11 U.S.C. 327(a). [M]ay employ one or more attorneys, accountants, appraisers, auctioneers, or other professional persons, that do not hold or represent an interest adverse to the estate, and that are disinterested persons, to represent or assist the [debtor] in carrying out the [debtor s] duties under this title. 28. Bankruptcy Rule 2014(a) requires that an application for retention include: Fed. R. Bankr. P [S]pecific facts showing the necessity for the employment, the name of the [firm] to be employed, the reasons for the selection, the professional services to be rendered, any proposed arrangement for compensation, and, to the best of the applicant s knowledge, all of the [firm s] connections with the debtors, creditors, any other party in interest, their respective attorneys and accountants, the United States Trustee, or any person employed in the office of the United States Trustee. 29. The Debtors submit that, for all the reasons stated above, the retention and employment of Bracewell as counsel to the Debtors is warranted. Further, as stated in the Cohen Declaration, Bracewell is a disinterested person within the meaning of 101(14) of the

10 Case Document 120 Filed in TXSB on 06/20/16 Page 10 of 11 Bankruptcy Code, as required by 327(a) of the Bankruptcy Code, and does not hold or represent an interest adverse to the Debtors estates and has no connection to the Debtors, their creditors, or other parties-in-interest, except as may be disclosed in the Cohen Declaration. VI. NUNC PRO TUNC RELIEF IS APPROPRIATE 30. The Debtors request approval of the employment of Bracewell nunc pro tunc to the Petition Date. Pursuant to the Debtors request, Bracewell has acted as the Debtors attorneys since the Petition Date with assurances that the Debtors would seek approval of its employment and retention effective nunc pro tunc to the Petition Date so that Bracewell may be compensated for its pre-application services. The Debtors believe that no party-in-interest will be prejudiced by the granting of the nunc pro tunc employment of Bracewell, since Bracewell has provided and continues to provide valuable services to the Debtors estates in the interim period. Furthermore, pursuant to Local Rule (b)(1), the Debtors have filed this Motion within 30 days of the Petition Date and therefore the Motion is deemed contemporaneous. Accordingly, Bracewell s retention should be granted nunc pro tunc to the Petition Date. 31. Based on the foregoing, the Debtors submit that they have satisfied the requirements of the Bankruptcy Code, Bankruptcy Rules and Local Rules. Accordingly, the Debtors respectfully request entry of the Order pursuant to 327(a) and 330 of the Bankruptcy Code, Bankruptcy Rules 2014(a) and 2016 and Local Rules and authorizing the Debtors to retain and employ Bracewell to act as attorneys in these chapter 11 cases nunc pro tunc to the Petition Date. VII. NOTICE 32. The Debtors will provide notice of this Application to: (a) the Office of the United States Trustee for the Southern District of Texas; (b) the entities listed on the Consolidated List of Creditors Holding the 30 Largest Unsecured Claims against the Debtors filed pursuant to

11 Case Document 120 Filed in TXSB on 06/20/16 Page 11 of 11 Bankruptcy Rule 1007(d); (c) all known and alleged secured creditors; (d) the Office of the United States Attorney General for the State of Texas; (e) the Internal Revenue Service; and (f) any party who has requested notice pursuant to Bankruptcy Rule In light of the nature of the relief requested in this Motion, the Debtors respectfully submit that no further notice is necessary. other court. VIII. NO PRIOR REQUEST 33. No prior application for the relief requested herein has been made to this or any IX. CONCLUSION WHEREFORE, the Debtors respectfully request that the Court enter an order, substantially in the form filed herewith, granting the relief requested in this Motion, and such other and further relief as may be just and proper under the circumstances. BRACEWELL LLP By: /s/ Jason G. Cohen Jason G. Cohen Texas Bar No William A. (Trey) Wood III Texas Bar No Chelsea R. Dal Corso Texas Bar No Louisiana, Suite 2300 Houston, Texas Telephone: (713) Facsimile: (713) PROPOSED COUNSEL FOR THE DEBTORS AND DEBTORS IN POSSESSION

12 Case Document Filed in TXSB on 06/20/16 Page 1 of 25 Exhibit A Cohen Declaration

13 Case Document Filed in TXSB on 06/20/16 Page 2 of 25 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS In re: ) Chapter 11 ) LINC USA GP, et al. 1 ) Case No (DRJ) ) Debtors. ) (Jointly Administered) follows: DECLARATION OF JASON G. COHEN IN SUPPORT OF THE DEBTORS APPLICATION FOR ENTRY OF AN ORDER AUTHORIZING THE RETENTION AND EMPLOYMENT OF BRACEWELL LLP AS ATTORNEYS FOR THE DEBTORS AND DEBTORS IN POSSESSION EFFECTIVE NUNC PRO TUNC TO THE PETITION DATE I, Jason G. Cohen, under penalty of perjury pursuant to 28 U.S.C. 1746, declare as 1. I am a partner in the law firm of Bracewell LLP ( Bracewell ), located at 711 Louisiana Street, Suite 2300, Houston, Texas I am a member in good standing of the State Bar of Texas, and I have been admitted to practice in the U.S. District Court for the Southern, Northern, Eastern and Western Districts of Texas, as well as the U.S. Court of Appeals for the Fifth Circuit. There are no disciplinary proceedings against me. 3. I submit this declaration in support of the Debtors Application for Entry of an Order Authorizing the Retention and Employment of Bracewell LLP as Attorneys for the Debtors and Debtors in Possession Effective Nunc Pro Tunc to the Petition Date (the 1 The Debtors in these chapter cases, along with the last four digits of each Debtor s federal tax identification number, are: Linc Energy Finance (USA), Inc. (6684); Linc USA GP (5234); Linc Energy Resources, Inc. (9613); Linc Gulf Coast Petroleum, Inc. (6790); Linc Energy Petroleum (Louisiana), LLC (1074); Linc Alaska Resources, LLC (2362); Paen Insula Holdings, LLC (1681); Linc Energy Petroleum (Wyoming), Inc. (9859); Diasu Holdings, LLC (9626); Diasu Oil & Gas Company, Inc. (8926); and Linc Energy Operations, Inc. (5806).

14 Case Document Filed in TXSB on 06/20/16 Page 3 of 25 Application ). 2 Except as otherwise noted, I have personal knowledge of the matters set forth herein. Bracewell s Qualifications 4. The Debtors seek to retain Bracewell because of Bracewell s recognized expertise and extensive experience and knowledge in the energy sector and in the field of debtors protections, creditors rights and business reorganizations under chapter 11 of the Bankruptcy Code. 5. Bracewell is currently and has been actively involved in major chapter 11 cases and has represented debtors in many cases, including most recently: In re Venoco, Inc., No (KG) (Bankr. D. Del. March 18, 2016); In re Energy & Exploration Partners Inc., et al., No (RFN) (Bankr. N.D. Tex. Dec. 7, 2015); In re WBH Energy, LP, No (HCM) (Bankr. W.D. Tex. Jan. 4, 2015); In re Optim Energy, LLC, No (BLS) (Bankr. D. Del. Feb. 12, 2014); In re TMT Procurement Corp., No (MI) (Bankr. S.D. Tex. Jul. 18, 2013); In re KIT Digital, Inc., No (REG) (Bankr. S.D.N.Y. Jun. 11, 2013); In re Marco Polo Seatrade B.V., No (JMP) (Bankr. S.D.N.Y. Jul. 29, 2011); In re Omega Navigation Enterprises, Inc., No (LMC) (Bankr. S.D. Tex. Jul. 8, 2011). 6. Prior to the Petition Date, Bracewell lawyers represented the Debtors in a variety of legal matters, including general corporate, financial and securities matters and therefore Bracewell has extensive and unique knowledge and familiarity with the Debtors business, assets and legal obligations and many of the potential legal issues that may arise in the context of these chapter 11 cases. Bracewell is both well-qualified and uniquely able to represent the Debtors in these chapter 11 cases in an efficient and timely manner. 2 Capitalized terms used but not otherwise defined herein shall have the meanings set forth in the Application. -2-

15 Case Document Filed in TXSB on 06/20/16 Page 4 of 25 Services to be Rendered 7. Subject to further order of the Court, the Debtors retained Bracewell to render, without limitation, the following legal services: a. Advising the Debtors with respect to their powers and duties as debtors in possession in the continued management and operation of its business and properties; b. Advising and consulting on the conduct of these chapter 11 cases, including all of the legal and administrative requirements of operating in chapter 11; c. Attending meetings and negotiating with representatives of creditors and other parties-in-interest; d. Taking all necessary actions to protect and preserve the Debtors estates, including prosecuting actions on the Debtors behalf, defending any action commenced against the Debtors, and representing the Debtors in negotiations concerning litigation in which the Debtors are involved, including objections to claims filed against the Debtors estates; e. Preparing pleadings in connection with these chapter 11 cases, including motions, applications, answers, orders, reports, and papers necessary or otherwise beneficial to the administration of the Debtors estates; f. Representing the Debtors in connection with obtaining authority to continue using cash collateral and postpetition financing; g. Advising the Debtors in connection with any potential sale of assets; h. Appearing before the Court and any appellate courts to represent the interests of the Debtors estates; i. Advising the Debtors regarding tax matters; j. Taking any necessary action on behalf of the Debtors to negotiate, prepare, and obtain approval of a disclosure statement and confirmation of a chapter 11 plan and all documents related thereto; and k. Performing all other necessary legal services for the Debtors in connection with the prosecution of these chapter 11 cases, including: (i) analyzing the Debtors leases and contracts and the assumption and assignment or rejection thereof; (ii) analyzing the validity of liens against the Debtors; and (iii) advising the Debtors on corporate and litigation matters. -3-

16 Case Document Filed in TXSB on 06/20/16 Page 5 of 25 Professional Compensation 8. Bracewell intends to apply for compensation for professional services rendered and reimbursement of expenses incurred in connection with these chapter 11 cases, subject to the Court s approval and in compliance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the Local Rules and any other applicable procedures or orders of the Court. The hourly rates and corresponding rate structure Bracewell will use in these chapter 11 cases are the same as the hourly rates and corresponding rate structure that Bracewell uses in other restructuring matters, as well as similar complex corporate, securities, and litigation matters whether in court or otherwise, regardless of whether a fee application is required. These rates and the rate structure reflect that such restructuring and other complex matters typically are national in scope and involve great intricacy, high stakes, and severe time pressures. 9. Bracewell operates in a national marketplace for legal services in which rates are driven by multiple factors relating to the individual lawyer, his or her area of specialization, the firm s expertise, performance, reputation, the nature of the work involved, and other factors. 10. Bracewell s hourly rates for matters related to these chapter 11 cases range as follows: Billing Category Range Partners $ $1, Associates $ $ Paraprofessionals $ $ The following professionals presently are expected to have primary responsibility for providing restructuring services to the Debtors: William A. (Trey) Wood III ($840.00) and Jason Cohen ($675.00). In addition, as necessary, other Bracewell professionals and paraprofessionals will provide services to the Debtors. -4-

17 Case Document Filed in TXSB on 06/20/16 Page 6 of Bracewell s hourly rates are set at a level designed to compensate Bracewell fairly for the work of its attorneys and paraprofessionals and to cover fixed and routine expenses. Hourly rates vary with the experience and seniority of the individuals assigned. These hourly rates are subject to periodic adjustments to reflect economic and other conditions. 13. In addition to its hourly rates, it is Bracewell s policy to charge its clients in all areas of practice for identifiable, non-overhead expenses incurred in connection with the client s case that would not have been incurred except for representation of that particular client. It is also Bracewell s policy to charge its clients only the amount actually incurred by Bracewell in connection with such items. Examples of such expenses include postage, overnight mail, courier delivery, transportation, overtime expenses, computer-assisted legal research, photocopying, airfare and lodging. 14. To ensure compliance with all applicable deadlines in these chapter 11 cases, Bracewell may utilize the services of overtime secretaries. Bracewell will bill the Debtors for overtime secretarial charges that arise out of business necessity. 15. Bracewell will charge no more than $0.20 per page for standard duplication services in these chapter 11 cases. Bracewell will not charge the Debtors for facsimile transmissions. Compensation Received by Bracewell from the Debtors 16. During the ninety (90) days before the Petition Date, Bracewell received payments in the amount of $312, for services rendered to the Debtors, including services in connection with potential out-of-court restructuring transactions and commencement of these chapter 11 cases (including the retainer, described below). 17. On March 15, 2016, the Debtors paid a $200, retainer to Bracewell, which was maintained in Bracewell s operating account. As of the Petition Date, the Debtors do not -5-

18 Case Document Filed in TXSB on 06/20/16 Page 7 of 25 believe that they owe Bracewell any amounts for legal services rendered before the Petition Date, although certain expenses and fees may have been incurred by Bracewell but not yet applied to Bracewell s retainer. Such amounts, if any, would be less than the balance of Bracewell s retainer as of the Petition Date. Bracewell expects to: (a) complete its reconciliation of prepetition fees and expenses actually incurred through the Petition Date no later than the filing of its first interim fee application in these cases; (b) make a corresponding adjustment to the amount of the retainer on or about that date; and (c) disclose such adjustment in its first interim fee application. Bracewell will not apply any portion of the retainer to fees and expenses incurred from and after the Petition Date unless and until authorized to do so by a further order of this Court. 18. Pursuant to Bankruptcy Rule 2016(b), Bracewell has not shared nor agreed to share (a) any compensation it has received or may receive with another party or person, other than the partners, associates, and contract attorneys associated with Bracewell or (b) any compensation another person or party has received or may receive. Statement Regarding U.S. Trustee Guidelines 19. Bracewell has agreed to use its reasonable efforts to comply with the U.S. Trustee s request for information and additional disclosures as set forth in the U.S. Trustee Guidelines, both in connection with this Application and in the interim and final fee applications to be filed by Bracewell in these chapter 11 cases. 20. The following information is provided in response to the request for additional information set forth in Paragraph D.1 of the U.S. Trustee Guidelines: Question: Response: Did you agree to any variations from, or alternatives to, your standard or customary billing arrangements for this engagement? No. -6-

19 Case Document Filed in TXSB on 06/20/16 Page 8 of 25 Question: Response: Question: Response: Question: Response: Do any of the professionals included in this engagement vary their rate based on the geographic location of the bankruptcy case? No. If you represented the client in the 12 months prepetition, disclose your billing rates and material financial terms for the prepetition engagement, including any adjustments during the 12 months prepetition. If your billing rates and material financial terms have changed postpetition, explain the difference and the reasons for the difference. As disclosed above, Bracewell represented the Debtors during the 12-month period prior to the Petition Date. During this time period, Bracewell charged its standard rates, subject to the customary annual rate increase as of November 1, The billing rates and financial terms have not changed postpetition. Has your client approved your prospective budget and staffing plan, and, if so, for what budget period. Yes, the budget has been approved through August 27, Bracewell s Disinterestedness 21. In connection with its proposed retention by the Debtors in these chapter 11 cases, Bracewell undertook to determine whether it had any conflicts or other relationships that might cause it not to be disinterested or to hold or represent an interest adverse to the Debtors. Specifically, Bracewell obtained from the Debtors and their representatives the names of individuals and entities that may be parties-in-interest in these chapter 11 cases (the Potential Parties-in-Interest ) and such parties are listed on Schedule 1 attached hereto. Bracewell has searched on its electronic database for its connections to the entities listed on Schedule 1. To the extent I have been able to ascertain that Bracewell has been retained within the last three years to represent any of the Potential Parties-in-Interest (or their affiliates, as the case may be) in matters unrelated to these cases, such facts are disclosed on Schedule 2 attached hereto. -7-

20 Case Document Filed in TXSB on 06/20/16 Page 9 of Bracewell and certain of its partners and associates may have in the past represented, may currently represent, and likely in the future will represent, parties-in-interest in these chapter 11 cases in connection with matters unrelated (except as otherwise disclosed herein) to the Debtors and these chapter 11 cases. Bracewell has searched on its electronic database for its connection to the entities listed on Schedule 1. The information listed on Schedule 1 may have changed without our knowledge and may change during the pendency of these chapter 11 cases. Accordingly, Bracewell will update this Declaration as necessary and when Bracewell becomes aware of additional material information. The following is a list of the categories that Bracewell has searched: 3 Category 4 Current and Recent Former Entities Affiliated with the Debtors Current and Recent Former Directors and Officers Contractual Counterparties Equity Holders Insurers Noteholders Professionals Ordinary Course Professionals Significant Vendors Taxing Authorities United States Trustee, Judges, and Court Contacts for the Southern District of Texas Utilities Regulatory Agencies Litigation Counterparties 23. In addition, Bracewell is or has been engaged in a number of matters in which attorneys and other professionals representing various parties-in-interest in these cases are 3 Bracewell s inclusion of parties in the following schedules is solely to illustrate Bracewell s conflict search process and is not an admission that any party has a valid claim against the Debtors or that any party properly belongs in the schedules or has a claim or legal relationship to the Debtors of the nature described in the schedules. 4 Certain parties may fall under multiple categories. To avoid redundancy and duplication, each vendor typically appears on one schedule. There is not a separate category for top 30 unsecured creditors, however they are identified in each separate schedule. -8-

21 Case Document Filed in TXSB on 06/20/16 Page 10 of 25 involved. Moreover, due to the nature and size of its practice, Bracewell has or has had relationships as counsel, co-counsel or referring counsel with many major law firms in most, if not all, major cities in the United States, which includes law firms representing creditors or other parties-in-interest in these chapter 11 cases. All such relationships are on matters unrelated to these cases. 24. Prior to joining Bracewell, certain Bracewell lawyers worked at other law firms that are involved or may become involved in these chapter 11 cases. To the best of my knowledge, such Bracewell lawyers work at prior law firms was unrelated to these chapter 11 cases. 25. To the best of my knowledge, (a) Bracewell is a disinterested person within the meaning of 101(14) of the Bankruptcy Code, as required by 327(a) of the Bankruptcy Code, and does not hold or represent an interest adverse to the Debtors estates and (b) Bracewell has no connection to the Debtors, their creditors, or other parties-in-interest, except as may be disclosed in this Declaration. 26. Listed on Schedule 2 to this Declaration are the results of Bracewell s conflicts searches of the above-listed entities. 5 For the avoidance of doubt, Bracewell will not commence a cause of action in these chapter 11 cases against the parties listed on Schedule 2 that are specifically identified as current clients of Bracewell unless Bracewell has an applicable waiver on file or first receives a waiver from such party allowing Bracewell to commence such an action. To the extent that a waiver does not exist or is not obtained from such client and it is 5 As referenced in Schedule 2, the term current client means a client to whom time was posted in the last 12 months preceding the Petition Date. As referenced in Schedule 2, the term former client means a client to whom time was posted between 12 and 36 months preceding the Petition Date. As a general matter, Bracewell discloses connections with former clients or closed clients for whom time was posted in the last 36 months, but does not disclose connections if the time was billed more than 36 months before the Petition Date. -9-

22 Case Document Filed in TXSB on 06/20/16 Page 11 of 25 necessary for the Debtors to commence an action against that client, the Debtors will be represented in such particular matter by conflicts counsel. 27. None of the clients listed on Schedule 2 represented more than one percent of Bracewell s fee receipts during the twelve months ending March 31, Bracewell s conflicts search of the parties-in-interest listed on Schedule 1 (that Bracewell was able to locate using its reasonable efforts) reveals, to the best of Bracewell s knowledge, that those Bracewell attorneys and paraprofessionals who previously worked at other law firms that represented certain potential parties-in-interest in these chapter 11 cases have not worked on matters relating to the Debtors restructuring efforts while at Bracewell. 29. Based on the conflicts search conducted to date and described herein, to the best of my knowledge, neither I, Bracewell, nor any partner or associate thereof, insofar as I have been able to ascertain, have any connection with the Debtors, their creditors, or any other partiesin-interest, their respective attorneys and accountants, the Office of the United States Trustee for the Southern District of Texas (the U.S. Trustee ), or any person employed in the Office of the U.S. Trustee, any Bankruptcy Judge currently serving on the United States Bankruptcy Court for the Southern District of Texas, except as disclosed or otherwise described herein. 30. Bracewell will review its files periodically during the pendency of these chapter 11 cases to ensure that no other conflicts or other disqualifying circumstances exist or arise. If any new relevant facts or relationships are discovered or arise, Bracewell will use reasonable efforts to identify such further developments and will file promptly a supplemental declaration, as required by Bankruptcy Rule 2014(a). 31. Generally, it is Bracewell s policy to disclose clients in the capacity that they first appear in a conflicts search. For example, if a client already has been disclosed in this -10-

23 Case Document Filed in TXSB on 06/20/16 Page 12 of 25 Declaration in one capacity (e.g., a utility), and the client appears in a subsequent conflicts search in a different capacity (e.g., a vendor), Bracewell does not disclose the same client again in supplemental declarations, unless the circumstances are such in the latter capacity that additional disclosure is required. 32. From time to time, Bracewell may have referred work to other professionals involved in these chapter 11 cases. Likewise, certain such professionals may have referred work to Bracewell. 33. Certain insurance companies pay the legal bills of Bracewell s clients. Some of these insurance companies may be involved in these chapter 11 cases. None of these insurance companies, however, are Bracewell clients as a result of the fact that they pay legal fees on behalf of Bracewell clients. Affirmative Statement of Disinterestedness 34. Based on the conflicts search conducted to date and described herein, to the best of my knowledge and insofar as I have been able to ascertain, (a) Bracewell is a disinterested person within the meaning of 101(14) of the Bankruptcy Code, as required by 327(a) of the Bankruptcy Code, and does not hold or represent an interest adverse to the Debtors estates and (b) Bracewell has no connection to the Debtors, their creditors, or other parties-in-interest, except as may be disclosed herein. [Remainder of page intentionally left blank] -11-

24 Case Document Filed in TXSB on 06/20/16 Page 13 of 25 Pursuant to 28 U.S.C. 1746, I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge and belief. Dated: June 20, 2016 Respectfully submitted, /s/ Jason G. Cohen Jason G. Cohen Partner, Bracewell LLP -12-

25 Case Document Filed in TXSB on 06/20/16 Page 14 of 25 Schedule 1 The following lists contain the names of reviewed entities as described more fully in the Declaration of Jason G. Cohen in Support of the Debtors Application for the Entry of an Order Authorizing the Retention and Employment of Bracewell LLP as Attorneys for the Debtors and Debtors in Possession Nunc Pro Tunc to the Petition Date (the Cohen Declaration ). Where the names of the entities reviewed are incomplete or ambiguous, the scope of the search was intentionally broad and inclusive, and Bracewell LLP reviewed each entity in its records, as more fully described in the Cohen Declaration, matching the incomplete or ambiguous name.

26 Case Document Filed in TXSB on 06/20/16 Page 15 of 25 LINC USA GP et al. List of Interested Parties Current and Recent Former Entities Affiliated with the Debtors Linc Energy Ltd. ERG Resources, LLC Linc Energy Finance USA (No. 1), Inc. Linc Energy (Montana), Inc. Linc Energy (USA), Inc. Linc Energy (USA), LLC Linc Clean Energy, Inc. Linc Energy (Alaska), Inc. Linc Energy (Wyoming), Inc. Linc Energy (Louisiana), LLC Renaissance Umiat, LLC Linc Energy GP 1 PTY Ltd Linc Energy GP 2 PTY Ltd ARC Alaska Ventures, LP Strong Resources, LLC Land Equity Holdings, LLC Huckabay Exploration, LLC Current and Recent Former Directors and Officers Michael Mapp Peter Bond Craig Ricato Scott Broussard Janelle van de Velde Gerry Agranoff Jim Hutchinson James S. Watt William H. Slavin Don Schofield Scott Y. Wood Contractual Counterparties 1000 Louisiana LP 3000 C Street, LLC ADT Security Services, Inc. Air Products, LLC Alliance Leasing Corp. Altius Resources, Inc. Anadarko E & P Offshore, LLC Axens North America, Inc.

27 Case Document Filed in TXSB on 06/20/16 Page 16 of 25 Bald Mountain Air Services, Inc. BASF Blake Heisler Bluegrass Water, LLC BP Exploration (Alaska), Inc. BP Exploration (Alaska), Inc. CDM Resource Management, LLC Chevron North America Exploration and Production Company Chevron U.S.A. Inc. ConocoPhillips Natural Gas Cook Inlet Energy, LLC Corporate Suites Data Foundry, Inc. Devon Energy Production Company Donlin Gold LLC EBX Holding, Ltda. EBX Holding, Ltda. ENSTAR Natural Gas Company Enterprise Crude Oil LLC Enterprise Products Operating Co., LLC ExxonMobil Gas & Power ExxonMobil Gas & Power Fircroft Engineering Services Fircroft Engineering Services Fisher Industrial Gateway Terminals Frank D. Schubert Galveston Bay Energy, Inc. Gulf South Holding, Inc. Gulf South Holding, Inc. Gulf South Holding, Inc. Gulfmark Energy, LLC Homer Electric Association Invensys Systems, Inc. James A. Whitson, Jr. Konica Minolta Business Solutions, U.S.A., Inc. Larry Lawrence Linc Energy Ltd LSNA Energy Group, LLC Maersk Olie of Gas A/S Mont Belvieu Holdings, Ltd Natural Gas Compression System NITEC, LLC North Slope Borough Pebble Ltd. Partnership Peninsula Marine, Inc. RLI Insurance Company

28 Case Document Filed in TXSB on 06/20/16 Page 17 of 25 RLI Insurance Company Robert Clifton Samson Exploration, LLC Scott Douglas & McConnico, LLP Seismic Micro-Technology, Inc. Seitel Data, Ltd. Shell Trading (US) Company TEXLA Energy Management, Inc. The Bank of New York Mellon Trust Company TW Telecom holdings, Inc. University of North Dakota Energy & Environmental Research Center WesternGeco, LLC Equity Holders Linc Energy Ltd Linc Energy GP1 Pty Ltd Linc Energy GP2 Pty Ltd Insurers Zurich American Insurance Company, CPP , Property Underwriter s at Lloyd s, London, DE , Hull and Machinery Underwriter s at Lloyd s, London, DE , Excess P & I Zurich American Insurance Company, General Liability, GLO AIG Specialty Insurance Company, PLS , Pollution Indian Harbor Insurance Company, XEC , Excess Environmental Zurich American Insurance Company, BAP , Automobile Zurich American Insurance Company, WC , Workers Compensation and Employers Liability Roberts Armytage & Partners, Ltd., B1368E150293, Control of Well and Equipment Zurich American Insurance Company, AUC , Umbrella Noteholders Whitebox Advisors Stonehill Capital Management Thornburg Investment Management Tennenbaum Capital Partners Beachpoint Capital GLG Partners PennantPark Investments Ensign Peak Millstreet Capital Bulwarkbay Business Development Corp.

29 Case Document Filed in TXSB on 06/20/16 Page 18 of 25 Redwood Capital Management Fidelity National Financial Vertex One Medley Capital Verition Fund Management ALJ Capital Golub Capital Marret Asset Management JGB Capital Sandler Capital Management Cedarview Capital Management Hudson Bay Capital Management Hancock Bank (aka Whitney) Hayman Advisors Professionals Bracewell, LLP Sandler O Neill + Partners, L.P. Parkman Whaling LLC Ordinary Course Professionals Doyle Restrepo Harvin & Robbins Crowell Moring Jackson Walker KPMG BDO Seidman Ernst Young Affiliated Tax Consultants Breazeale, Sachse & Wilson, L.L.P. Scott Douglas McConnico Norton Rose Fulbright DLA Piper, LLP Brock Person Guerra Reyna, P.C. R. Carson Llewellyn Bierne Maynard Parsons Adams, Reese Creditors Who Have the 30 Largest Unsecured Claims (Consolidated) AAA Well Service LLC Premium Oilfield Services, LLC Wood Group Production Services Crain Brothers, Inc. Peninsula Marine, Inc.

30 Case Document Filed in TXSB on 06/20/16 Page 19 of 25 Swat, Inc. CDM Resource Management, LLC Tanner Services, LLC Pro Field Services, Inc. Warrior Energy Services Corp. New Tech Global Ventures LLC Odessa Pumps & Equipment Inc. 3C2K Oilfield Services LLC Pine Island Chemical Solutions, LLC Ernst & Young LLP Mitchell Industries ARD Well Service, LLC Golder Associates, Inc. IHS Global, Inc. Natural Gas Compression Systems, Inc. Wrangler Wireline, Inc. Crowell & Moring LLP Duphil Inc. Premiere, Inc. Universal Wellhead Services, LLC Smart Oilfield Services, Inc. Francis Drilling Fluids Ltd. Knight Oil Tools, Inc. Travis/Peterson Environmental Consulting, Inc. Superior Slickline Services Significant Vendors 3C2K Land Services 3C2K Oilfield Services LLC AAA Well Service LLC ABC Nitrogen Service Corp Total Alert Systems Technologies Total American Eagle Logistics Baker Petrolite Corporation Best Oilfield Supply LLC Cactus Pipe & Supply CDM Resource Management, LLC Compliance Group Cowboy Tools Inc. Duphil Inc Gulf Coast Measurement, Inc. Horizon Environmental Jaguar Fuel K-3 Services BMW Finance

31 Case Document Filed in TXSB on 06/20/16 Page 20 of 25 Mitchell Industries Natural Gas Compression Systems Odessa Pumps & Equipment Inc. Orange Oilfield Supply Peninsula Marine Inc. Pine Island Chemical Solutions, LLC Sabine Environmental Services, LLC Shivers Enterprises Inc. Sun Coast Resources, Inc. Superior Vacuum Services, LLC Wood Group Production And Consulting Services Wood Group Production Services Wrangler Wireline Inc. Taxing Authorities County Of Brazoria, TX Parish of Cameron, LA Goose Creek Consolidated Independent School District County of Orange, TX County of Harris, TX Texas Comptroller of Public Accounts Louisiana Department of Revenue Wyoming Department of Revenue Delaware Franchise Taxes County of Converse, WY Barbers Hill Independent School District Parish of Lafourche, LA County of Calhoun, TX County of Chambers, TX County of Galveston, TX United States Trustee, Judges, and Court Contacts for the Southern District of Texas Judges Chief Judge David R. Jones Judge Jeff Bohm Judge Karen K. Brown Judge Marvin Isgur Judge Letitia Z. Paul Judge Eduardo V. Rodriguez U.S. Trustee Diane Livingstone