Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 1 of 62 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION ) In re: ) Chapter 11 ) SANDRIDGE ENERGY, INC., et al.,1 ) Case No. 16-32488 (DRJ) ) Debtors. ) ) (Jointly Administered) APPLICATION OF THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS OF SANDRIDGE ENERGY, INC., ET AL. TO RETAIN AND EMPLOY AKIN GUMP STRAUSS HAUER & FELD LLP AS COUNSEL, NUNC PRO TUNC TO JUNE 7, 2016 A HEARING WILL BE CONDUCTED ON THIS MATTER ON JULY 26, 2016, AT 9:00 A.M. PREVAILING CENTRAL TIME IN COURTROOM 400, 4th FLOOR, UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS, 515 RUSK STREET, HOUSTON, TEXAS 77002. IF YOU OPPOSE THE APPLICATION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE IN THE UNITED STATES WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE APPLICATION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE APPLICATION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE APPLICATION AT THE HEARING. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY. 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s tax identification number are as follows: SandRidge Energy, Inc. (4793); 4th Street Properties, LLC (N/A); Black Bayou Exploration, L.L.C. (0561); Braniff Restaurant Holdings, LLC (2453); CEBA Gathering, LLC (6478); CEBA Midstream GP, LLC (0511); CEBA Midstream, LP (7252); Cholla Pipeline, L.P. (5092); Cornhusker Energy, L.L.C. (4609); FAE Holdings 389322R, LLC (N/A); Integra Energy, L.L.C. (7527); Lariat Services, Inc. (0702); MidContinent Resources, LLC (6928); Mistmada Oil Company, Inc. (3032); Piñon Gathering Company, LLC (5943); Sabino Exploration, LLC (1929); Sagebrush Pipeline, LLC (0515); SandRidge CO2, LLC (7903); SandRidge Exploration and Production, LLC (6535); SandRidge Holdings, Inc. (8401); SandRidge Midstream, Inc. (1148); SandRidge Operating Company (1245); SandRidge Realty, LLC (6079); Sierra Madera CO2 Pipeline, LLC (1558); and WTO Gas Gathering Company, LLC (N/A). The location of the Debtors’ service address is: 123 Robert S. Kerr Avenue, Oklahoma City, Oklahoma 73102. Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 2 of 62 The Official Committee of Unsecured Creditors (the “Committee”) of SandRidge Energy, Inc., et al., (collectively, the “Debtors”) submits this application (the “Application”), pursuant to sections 328(a) and 1103(a) of title 11 of the United States Code (the “Bankruptcy Code”), Rule 2014 of the Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”) and Rule 2014-1 of the Local Rules of Bankruptcy Practice and Procedure for the United States Bankruptcy Court for the Southern District of Texas (the “Local Rules”), for entry of an order (the “Order”), substantially in the form attached hereto as Exhibit A, authorizing the Committee to retain and employ Akin Gump Strauss Hauer & Feld LLP (“Akin Gump”) as its counsel in connection with the Debtors’ chapter 11 cases (the “Chapter 11 Cases”), nunc pro tunc to June 7, 2016. In support of this Application, the Committee submits the declaration of Charles R. Gibbs, a partner of Akin Gump (the “Gibbs Declaration”), and the declaration of Rita Marie Ritrovato, an Assistant Vice President of Wilmington Trust, National Association, as Indenture Trustee, the chair of the Committee (the “Marie Ritrovato Declaration” and, together with the Gibbs Declaration, the “Declarations”), attached hereto as Exhibit B and Exhibit C, respectively. In further support of this Application, the Committee respectfully represents as follows: JURISDICTION AND VENUE 1. This Court has jurisdiction over this Application pursuant to 28 U.S.C. §§ 157 and 1334. 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. §§ 1408 and 1409. 3. The statutory and rule predicates for the relief requested herein are Bankruptcy Code sections 328(a) and 1103, Bankruptcy Rule 2014 and Local Rule 2014-1. 2 Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 3 of 62 BACKGROUND 4. On May 16, 2016 (the “Petition Date”), each of the Debtors filed a voluntary petition for relief pursuant to chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”). 5. The Debtors continue to operate their business as debtors-in-possession pursuant to Bankruptcy Code sections 1107(a) and 1108. No request has been made for the appointment of a trustee or an examiner. 6. On June 3, 2016 (the “Formation Date”), the United States Trustee for the Southern District of Texas (the “U.S. Trustee”) appointed the Committee pursuant to Bankruptcy Code section 1102 [Docket No. 173]. One June 7, 2016 (the “Reconstituted Formation Date”) the U.S. Trustee reconstituted the Committee [Docket No. 193].2 RELIEF REQUESTED 7. The Committee seeks to retain and employ Akin Gump as its counsel, pursuant to Bankruptcy Code sections 328(a) and 1103(a), Bankruptcy Rule 2014 and Local Rule 2014-1, nunc pro tunc to June 7, 2016. RETENTION OF AKIN GUMP 8. The Committee respectfully submits that it is necessary and appropriate for it to employ and retain Akin Gump to, among other things: (a) advise the Committee with respect to its rights, duties and powers in the Debtors’ Chapter 11 Cases; (b) assist and advise the Committee in its consultations and negotiations with the Debtors relative to the administration of the Debtors’ Chapter 11 Cases; 2 The Committee is currently comprised of the following entities: (a) Wilmington Trust, N.A, as Indenture Trustee; (b) Wells Fargo Bank, N.A., as Indenture Trustee; (c) PowerSecure, Inc.; and (d) Select Energy Services, LLC. 3 Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 4 of 62 (c) assist the Committee in analyzing the claims of the Debtors’ creditors and the Debtors’ capital structure and in negotiating with holders of claims and equity interests; (d) assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors and their insiders and of the operation of the Debtors’ businesses; (e) assist the Committee in its analysis of, and negotiations with, the Debtors or any third party concerning matters related to, among other things, the assumption or rejection of certain leases of non-residential real property and executory contracts, asset dispositions, financing of other transactions and the terms of one or more plans of reorganization for the Debtors and accompanying disclosure statements and related plan documents; (f) assist and advise the Committee as to its communications to the general creditor body regarding significant matters in the Debtors’ Chapter 11 Cases; (g) represent the Committee at all hearings and other proceedings before this Court; (h) review and analyze applications, orders, statements of operations and schedules filed with the Court and advise the Committee as to their propriety and, to the extent deemed appropriate by the Committee, support, join or object thereto; (i) advise and assist the Committee with respect to any legislative, regulatory or governmental activities; (j) assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committee’s interests and objectives; (k) assist the Committee in its review and analysis of all of the Debtors’ various agreements; (l) prepare, on behalf of the Committee, any pleadings, including, without limitation, motions, memoranda, complaints, adversary complaints, objections or comments in connection with any matter related to the Debtors or the Debtors’ Chapter 11 Cases; (m) investigate and analyze any claims against the Debtors’ non-debtor affiliates; and (n) perform such other legal services as may be required or are otherwise deemed to be in the interests of the Committee in accordance with the Committee’s powers and duties as set forth in the Bankruptcy Code, Bankruptcy Rules or other applicable law. 4 Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 5 of 62 9. The Committee believes Akin Gump possesses extensive knowledge and expertise in the areas of law relevant to the Debtors’ Chapter 11 Cases, and that Akin Gump is well-qualified to represent the Committee in the Debtors’ Chapter 11 Cases. In selecting counsel, the Committee sought attorneys with considerable experience in representing unsecured creditors’ committees in chapter 11 reorganization cases and other debt restructurings. Akin Gump has such experience, as Akin Gump is currently representing and has represented official creditors’ committees in many significant chapter 11 reorganizations, including the following chapter 11 cases: In re ATA Holdings Corp.; In re BPZ Resources, Inc.; In re Cal Dive International, Inc.; In re Chassix Inc.; In re Delta Air Lines, Inc.; In re Delta Petroleum Corp.; In re Dynegy Holdings, LLC; In re Edison Mission Energy, et al.; In re Excel Maritime Carriers LTD; In re Emerald Oil, Inc.; In re Friendly Ice Cream Corporation; In re Goodrich Petroleum Corp. et al; In re Hawker Beechcraft, Inc.; In re Metals USA, Inc.; In re Overseas Shipholding Group, Inc.; In re Quiksilver, Inc.; In re R.E. Loans, LLC; In re Saint Vincents Catholic Medical Centers of New York; In re Seahawk Drilling, Inc.; In re Swift Energy Co.; In re TOUSA, Inc.; and In re Vitro America, LLC. In addition, Akin Gump has represented debtors, creditors, and other parties in interest in a number of oil and gas chapter 11 cases, including the following not mentioned above: In re Hercules Offshore, Inc.; In re Black Elk Energy Offshore Operations, LLC; In re Geokinetics Inc.; In re Quicksilver Resources Inc.; In re ATP Oil & Gas Corporation; In re NightHawk Oilfield Services; In re Sabine Oil & Gas Corporation; In re Autoseis, Inc.; and In re Milagro Oil & Gas, Inc. 10. Because of the extensive legal services that may be necessary in these Chapter 11 Cases, and the fact that the full nature and extent of such services are not known at this time, the Committee believes that the employment of Akin Gump to provide the services described above 5 Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 6 of 62 and such other services as may be necessary for the Committee to satisfy its obligations to the Debtors’ unsecured creditor constituency is appropriate and in the best interests of the Debtors’ estates and their creditors. 11. The Committee requests that all fees and related costs and expenses incurred by the Committee on account of services rendered by Akin Gump in these Chapter 11 Cases be paid as administrative expenses of the estates pursuant to Bankruptcy Code sections 328, 330, 331, 503(b) and 507(a)(2). Subject to this Court’s approval, Akin Gump will charge for its legal services on an hourly basis in accordance with its ordinary and customary hourly rates in effect on the date such services are rendered, subject to Bankruptcy Code sections 328, 330 and 331. The current hourly rates charged by Akin Gump for professionals and paraprofessionals employed in its offices are provided below: Billing Category Range Partners $800 – $1,425 Senior Counsel and Counsel $740 – $905 Associates $455 – $825 Paraprofessionals $210 – $375 These hourly rates are subject to periodic adjustments (typically in January of each year) to reflect economic and other conditions. Akin Gump reserves the right to file an application for an allowance of an enhanced fee award at the end of this proceeding, subject to the discretion of the Committee. 12. Akin Gump has advised the Committee that it is Akin Gump’s policy to charge its clients in all areas of practice for expenses incurred in connection with the client’s case. The expenses charged to clients include, among other things, photocopying charges, travel expenses, expenses for “working meals” and computerized research. Akin Gump will maintain detailed 6 Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 7 of 62 records of actual and necessary costs and expenses incurred in connection with the legal services described above. 13. The names, positions and current hourly rates of the Akin Gump financial restructuring attorneys currently expected to have primary responsibility for providing services to the Committee are as follows: ATTORNEY POSITION/DEPARTMENT HOURLY RATE Daniel H. Golden Partner / Financial Restructuring Department $1,325.00 Charles R. Gibbs Partner / Financial Restructuring Department $950.003 Brad M. Kahn Partner / Financial Restructuring Department $900.00 Rachel Ehrlich Albanese Senior Counsel / Financial Restructuring $875.00 Department Rachelle L. Rubin Associate / Financial Restructuring Department $455.00 In addition to the financial restructuring lawyers named above, it will be necessary, during the course of these cases, for other Akin Gump professionals in other legal disciplines to provide services to the Committee. 14. Akin Gump has advised the Committee it will apply for compensation and reimbursement of expenses in accordance with the procedures set forth in Bankruptcy Code sections 330 and 331, the applicable Federal Rules of Bankruptcy Procedure, and the applicable Local Rules. Akin Gump has advised the Committee it also intends to make a reasonable effort to comply with the U.S. Trustee’s requests for information and additional disclosures as set forth in the Guidelines for Reviewing Applications for Compensation and Reimbursement of Expenses Filed under 11 U.S.C. § 330 by Attorneys in Larger Chapter 11 Cases Effective as of November 3 This does not reflect the standard hourly rate for Mr. Gibbs, but rather represents a special hourly rate negotiated with the Committee. 7 Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 8 of 62 1, 2013 (the “Revised UST Guidelines”), both in connection with this Application and the interim and final fee applications to be filed by Akin Gump in the Debtors’ Chapter 11 Cases.4 To that end, Akin Gump has advised the Committee it responds to the questions set forth in Section D of the Revised UST Guidelines as follows: (a) With the exception of a negotiated hourly rate for Charles R. Gibbs (which rate is lower than the standard rate for Mr. Gibbs), Akin Gump did not agree to any variations from, or alternatives to, its standard or customary billing arrangements for this engagement; (b) No rate for any of the professionals included in this engagement varies based on the geographic location of the bankruptcy case; (c) Akin Gump did not represent any member of the Committee prior to its retention by the Committee; (d) Akin Gump expects to develop a prospective budget and staffing plan to reasonably comply with the U.S. Trustee’s request for information and additional disclosures, as to which Akin Gump reserves all rights; and (e) The Committee has approved Akin Gump’s proposed hourly billing rates. The Akin Gump attorneys and paraprofessionals staffed on the Debtors’ Chapter 11 Cases, subject to modification depending upon further development, are set forth above in paragraph 13. 15. Upon information and belief, Akin Gump does not represent and does not hold any interest adverse to the Debtors’ estates or their creditors in the matters upon which Akin Gump is to be engaged, except to the extent set forth in the Gibbs Declaration. Akin Gump is, however, a large firm with a national and international practice and may represent or may have represented certain of the Debtors’ creditors, equity holders, related parties or other parties in interest in matters unrelated to these cases. 4 Akin Gump’s intention to make reasonable efforts to comply with the U.S. Trustee’s requests for information and additional disclosures as set forth in the Revised UST Guidelines in connection with the Application and the interim and final fee applications to be filed by Akin Gump in the Debtors’ Chapter 11 Cases is based exclusively on the facts and circumstances of the Debtors’ Chapter 11 Cases. Akin Gump fully reserves the right to object to the requirements contained in the Revised UST Guidelines should it determine that it is appropriate to do so. 8 Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 9 of 62 Case 16-32488 Document 441 Filed in TXSB on 07/01/16 Page 10 of 62 CERTIFICATE OF SERVICE I certify that on July 1, 2016, I caused a copy of the foregoing document to be served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas and by U.S. Mail to the U.S. Trustee. /s/ Charles R. Gibbs Charles R. Gibbs 10