IN THE UNITED STATES BANKRUPTCY COURT FOR THE … · Of those eleven Bank Accounts, one Bank Account serves as the Debtors’ main operating account; one Bank Account is a restricted

IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

§ In re: § Chapter 11 § MEMORIAL PRODUCTION § Case No. 17-______ (___) PARTNERS LP, et al., § § (Joint Administration Requested) Debtors.1 § (Emergency Hearing Requested) §

EMERGENCY MOTION OF DEBTORS PURSUANT TO

11 U.S.C. §§ 105(a), 345(b), 363(b)(1), 363(c)(1), AND 364(a) AND FED. R. BANKR. P. 6003 AND 6004

FOR INTERIM AND FINAL ORDERS (I) AUTHORIZING THE DEBTORS TO (A) CONTINUE THEIR EXISTING CASH

MANAGEMENT SYSTEM, (B) MAINTAIN BUSINESS FORMS AND EXISTING BANK ACCOUNTS, (C) CONTINUE INTERCOMPANY

ARRANGEMENTS, AND (D) CONTINUE USING CORPORATE PAYMENT CARDS; (II) EXTENDING THE TIME TO COMPLY WITH, OR SEEK

WAIVER OF, THE REQUIREMENTS OF 11 U.S.C. § 345(b); (III) WAIVING THE REQUIREMENTS OF RULE 7B OF THE PROCEDURES FOR COMPLEX

CHAPTER 11 BANKRUPTCY CASES; AND (IV) GRANTING RELATED RELIEF

1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor’s federal tax identification number, as applicable, are: Memorial Production Partners LP (6667); Memorial Production Partners GP LLC; MEMP Services LLC (1887); Memorial Production Operating LLC; Memorial Production Finance Corporation (3356); WHT Energy Partners LLC; WHT Carthage LLC; Memorial Midstream LLC; Beta Operating Company, LLC; Columbus Energy, LLC; Rise Energy Operating, LLC; Rise Energy Minerals, LLC; Rise Energy Beta, LLC; San Pedro Bay Pipeline Company (1234); and Memorial Energy Services LLC. The Debtors’ mailing address is 500 Dallas Street, Suite 1600, Houston, Texas 77002.

Case 17-30262 Document 8 Filed in TXSB on 01/17/17 Page 1 of 56

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THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, 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 WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION 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 MOTION 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 MOTION AT THE HEARING.

REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY.

EMERGENCY RELIEF HAS BEEN REQUESTED. IF THE COURT CONSIDERS THE MOTION ON AN EMERGENCY BASIS, THEN YOU WILL HAVE LESS THAN 21 DAYS TO ANSWER. IF YOU OBJECT TO THE REQUESTED RELIEF OR IF YOU BELIEVE THAT THE EMERGENCY CONSIDERATION IS NOT WARRANTED, YOU SHOULD FILE AN IMMEDIATE RESPONSE.

Memorial Production Partners LP (“MEMP”) and its debtor affiliates in the

above-captioned chapter 11 cases, as debtors and debtors in possession (collectively, the

“Debtors”), respectfully represent as follows in support of this motion (this “Motion”):

Relief Requested

1. Pursuant to sections 105(a), 345(b), 363(b)(1), 363(c)(1), and 364(a) of

title 11 of the United States Code (the “Bankruptcy Code”) and Rules 6003 and 6004 of the

Federal Rules of Bankruptcy Procedure (the “Bankruptcy Rules”), the Debtors request

(i) interim and final authority to (a) continue to operate their existing cash management system

(the “Cash Management System”), as described herein, including the continued maintenance of

existing bank accounts (the “Bank Accounts”) with Wells Fargo Bank, National Association

(“Wells Fargo”), and continue transferring funds among the Debtors and their non-Debtor

affiliates in the ordinary course of business, consistent with their prepetition practices; (b) honor


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certain prepetition obligations related to the Cash Management System; (c) maintain existing

business forms; and (d) continue using Corporate Payment Cards and pay all obligations related

thereto; (ii) an extension of time to comply with, or seek waiver of the requirements of, section

345(b) of the Bankruptcy Code for 45 days (or such later time as may be agreed to by the Office

of the United States Trustee for Region 7 (the “U.S. Trustee”) or as approved by the Court);

(iii) a waiver of Rule 7B of the Complex Chapter 11 Guidelines (defined below); and (iv) related

relief.

2. The Debtors also request that the Court authorize and direct applicable

financial institutions to receive, process, honor, and pay all checks presented for payment and

electronic payment requests relating to the foregoing to the extent that sufficient funds are on

deposit and standing in the Debtors’ credit in the applicable bank accounts to cover such

payment, whether such checks were presented or electronic requests were submitted before, on,

or after the Petition Date (as defined below), and that Wells Fargo or such other financial

institutions be authorized to rely on the Debtors’ designation of any particular check or electronic

payment request as appropriate pursuant to this Motion without any duty of further inquiry and

without liability for following the Debtors’ instructions. The Debtors further request that the

Court authorize Wells Fargo or such other financial institutions to continue to charge Bank Fees

and to charge back returned items to the Bank Accounts, whether such items are dated before,

on, or after the Petition Date.

3. A proposed form of order granting the relief requested herein on an

interim basis is annexed hereto as Exhibit A (the “Proposed Interim Order”) and, pending a

final hearing on the relief requested herein, on a final basis as Exhibit B (the “Proposed Final

Order”).


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Jurisdiction

4. This Court has jurisdiction to consider this matter pursuant to 28 U.S.C.

§§ 157 and 1334 and the Order of Reference to Bankruptcy Judges, General Order 2012-6 (S.D.

Tex. May 24, 2012) (Hinojosa, C.J.). This is a core proceeding pursuant to 28 U.S.C. § 157(b).

Venue is proper before this Court pursuant to 28 U.S.C. §§ 1408 and 1409.

Background

5. On the date hereof (the “Petition Date”), each of the Debtors commenced

with this Court a voluntary case under chapter 11 of the Bankruptcy Code. The Debtors continue

to operate their business and manage their properties as debtors in possession pursuant to

sections 1107(a) and 1108 of the Bankruptcy Code. No trustee, examiner, or statutory

committee of creditors has been appointed in these chapter 11 cases. Contemporaneously

herewith, the Debtors have filed a motion requesting joint administration of these chapter 11

cases pursuant to Bankruptcy Rule 1015(b) and Rule 1015-1 of the Bankruptcy Local Rules for

the Southern District of Texas (the “Local Rules”).

6. Additional information regarding the circumstances leading to the

commencement of these chapter 11 cases and information regarding the Debtors’ business and

capital structure is set forth in the Declaration of Robert L. Stillwell, Jr. in Support of the

Debtors’ Chapter 11 Petitions and Related Requests for Relief (the “Stillwell Declaration”),

which has been filed contemporaneously herewith.

The Debtors’ Cash Management System

7. In the ordinary course of their business, the Debtors have historically used

the Cash Management System to fund their operations, as well as the operations of certain of

their non-Debtor affiliates. The Cash Management System is tailored to meet the Debtors’

operating needs as a manager of oil and natural gas producing properties. It allows the Debtors


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to efficiently collect and transfer the cash generated by their business and pay their financial and

other obligations. It also enables the Debtors to facilitate their cash forecasting and reporting,

monitor their collection and disbursement of funds, and maintain control over the administration

of the Bank Accounts. A general overview of the movement of cash through the Cash

Management System is illustrated by the flow of funds chart attached as Exhibit C hereto.

8. The Cash Management System includes eleven Bank Accounts that are

held by four entities: (i) the Memorial Production Operating LLC (“MPO”; such accounts, the

“MPO Accounts”); (ii) Beta Operating Company, LLC (“Beta”; such accounts, the “Beta

Accounts”); (iii) San Pedro Bay Pipeline Company (“San Pedro”; such accounts, the “San

Pedro Accounts”); and (iv) MEMP Services LLC (“MEMP Services”; such accounts, the

“MEMP Services Accounts”). Of those eleven Bank Accounts, one Bank Account serves as the

Debtors’ main operating account; one Bank Account is a restricted money market account which

serves to cash collateralize the Debtors’ obligations to Wells Fargo in connection with the

Debtors’ use of corporate credit and purchase cards (as described below, the “Corporate Credit

Cards”); and the remaining nine Bank Accounts are zero-balance accounts (each, a “Zero-

Balance Account”) that are used principally to make disbursements to third parties and, in one

case, to collect receipts from certain operations.2 All of the Bank Accounts are maintained with

Wells Fargo, an authorized bank depository (as such, an “Authorized Depository”) under the

Operating Guidelines and Reporting Requirements for Debtors in Possession and Trustees (the

“UST Operating Guidelines”) published by the U.S. Trustee.

9. The Cash Management System is designed to facilitate the Debtors’

receipts and disbursement of funds. The Debtors’ receipts are generally derived from (i) the 2 The Bank Accounts do not include two deposit accounts maintained by the Debtors’ non-Debtor affiliates MEMP S-1, Inc. and MEMP S-2, Inc., respectively.


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sales of oil and natural gas from wells operated by the Debtors; (ii) working interest

disbursements from wells in which the Debtors have a non-operating interest; and (iii) regular

cash payments from counterparties to the Debtors’ derivatives contracts (the “Hedges”). The

Debtors’ disbursements generally include (i) the expenses of developing and operating their oil

and natural gas wells; (ii) joint interest billings owed to parties that operate wells in which the

Debtors have a non-operating interest; (iii) royalties and working interest payments owed in

accordance with the Debtors’ oil and gas leases or under grants of overriding royalty interests;

(iv) taxes; (v) corporate overhead expenses; and (vi) payments on account of long-term debt. As

discussed below, each component of the Cash Management System is integral to these processes.

A. The MPO Accounts

10. MPO is the Debtors’ main operating subsidiary and is the most financially

active entity in the Debtors’ enterprise. It enters into the majority of the Debtors’ contracts. On

behalf of itself and its affiliates, MPO collects most of the Debtors’ revenues and makes most of

the disbursements necessary to operate the Debtors’ business.

i. The MPO Operating Account

11. MPO conducts most of its financial activity through a Bank Account

ending in 3030 (the “MPO Operating Account”). The MPO Operating Account is funded by

receipts from the Debtors’ onshore oil and gas business and Hedge receivables. MPO uses the

MPO Operating Account to satisfy many of the Debtors’ obligations to third parties, including

payments on account of the Debtors’ long-term debt obligations, purchasing cards, certain

Hedges, Bank Fees, taxes, and trade obligations paid by wire transfer. The Debtors use the MPO

Operating Account in MPO’s role as “central banker” for the Debtors, collecting most of the

Debtors’ cash receipts and disbursing funds to the Zero-Balance Accounts as necessary to satisfy

the Debtors’ payment obligations. The MPO Operating Account also serves as the central


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concentration account to which all funds from the Zero-Balance Accounts are swept at the end of

each day. Affiliates’ intercompany obligations to MPO that arise from MPO’s payments to third

parties are not settled in cash but are reflected by means of book entries in the Debtors’ books

and records. As of the Petition Date, the MPO Operating Account had a balance of

approximately $31.7 million.

ii. The MPO Zero-Balance Accounts

12. In addition to the MPO Operating Account, MPO maintains two Zero-

Balance Accounts, ending in 2179 (the “MPO Royalty Account”) and 2164 (the “MPO A/P

Account,” and together with the MPO Royalty Account, the “MPO Zero-Balance Accounts”),

respectively, that are used to make disbursements to third parties. Each day, the MPO Zero-

Balance Accounts begin with a zero balance. Throughout the day, MPO funds the MPO Zero-

Balance Accounts as needed from the MPO Operating Account and makes disbursements from

the MPO Zero-Balance Accounts. At the end of each day, any funds remaining in the MPO

Zero-Balance Accounts are automatically returned to the MPO Operating Account. The MPO

A/P Account is used to make disbursements to third parties by ACH, check, and virtual card (as

described below, “V-Card”) on account of the Debtors’ trade obligations, taxes, and joint

interest billings. The MPO Royalty Account is used to pay lease royalties and working interest

disbursements to third parties.

iii. The MPO Cash Collateral Account

13. In addition to the MPO Operating Account and the MPO Zero-Balance

Accounts, the Debtors maintain a restricted money market account ending in 0132 (the “MPO

Cash Collateral Account”) that serves to cash collateralize the Debtors’ obligations to Wells

Fargo with respect to the Debtors’ use of the Corporate Credit Cards. In the ordinary course of


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business, the Debtors maintain Corporate Credit Cards (discussed in further detail below) that are

issued by Wells Fargo (in such capacity, the “Credit Card Provider”) pursuant to that certain

WellsOne Commercial Card Agreement, dated on or around July 6, 2016 (as amended, restated,

supplemented or otherwise modified from time to time, the “Card Agreement”), between the

Credit Card Provider and MPO. The Debtors’ obligations to the Credit Card Provider under the

Card Agreement were previously secured by certain collateral pursuant to that certain Credit

Agreement, dated as of December 14, 2011, by and among MPO, as borrower, MEMP, as parent

guarantor, Wells Fargo, as administrative agent, the lenders party thereto, and the other parties

thereto (as amended, restated, supplemented or otherwise modified from time to time, the “RBL

Credit Agreement”).

14. Prior to the Petition Date, the Credit Card Provider and MPO amended the

Card Agreement to require the Debtors to open the MPO Cash Collateral Account and fund that

account with $150,000 (the “Collateral”). In addition, MPO and the Credit Card Provider

entered into that certain Security Agreement: Immediately Restricted Wells Fargo Bank, National

Association Deposit Account, dated as of January 13, 2017 (the “Security Agreement”),

pursuant to which the Debtors granted the Credit Card Provider a valid and perfected, non-

avoidable first-priority lien on the Collateral in the MPO Cash Collateral Account. Pursuant to

the terms of the Security Agreement, the Debtors are not permitted to make debits or

withdrawals from the MPO Cash Collateral Account, and, as of the Petition Date, the MPO Cash

Collateral Account maintained a balance of $150,000.

B. The Beta Accounts

15. Beta maintains two Zero-Balance Accounts ending in 1869 (the “Beta

Main Account”) and 0759 (the “Beta A/P Account”), respectively. The Beta Main Account is

funded by receipts from the Debtors’ offshore California oil and gas business and by


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intercompany disbursements from MPO. It is used (i) to make disbursements to the Beta A/P

Account and (ii) to make disbursements to third parties by debit or wire transfer on account of

government fees, lease royalties, and other operating expenses of Beta. Any funds in the Beta

Main Account at the end of each day are automatically returned to the MPO Operating Account.

The Beta A/P Account functions like the MPO Zero-Balance Accounts. It is funded as needed

from the Beta Main Account and used to make disbursements by ACH, check, and V-Card to

third parties on account of certain trade obligations, taxes, and other operating expenses of Beta.

Any funds remaining in the Beta A/P Account at the end of each day are automatically returned

to the Beta Main Account and then transferred to the MPO Operating Account as noted above.

C. The San Pedro Accounts

16. San Pedro maintains two Zero-Balance Accounts ending in 4044 (the

“San Pedro Main Account”) and 0767 (the “San Pedro A/P Account”), respectively, which

are used to support its obligations related to the Debtors’ ownership and use of a federally

regulated pipeline off the coast of southern California. The San Pedro Main Account is funded

through intercompany disbursements from the MPO Operating Account and is used (i) to make

disbursements to the San Pedro A/P Account and (ii) to make disbursements to third parties by

wire transfer. Any funds remaining in the San Pedro Main Account at the end of each day are

automatically returned to the MPO Operating Account. The San Pedro A/P Account functions

like the Beta A/P Account. It is funded as needed from the San Pedro Main Account and is used

to make disbursements to third parties by ACH, check, and V-Card on account of certain trade

obligations, taxes, and other operating expenses of San Pedro. Any funds remaining in the San

Pedro A/P Account at the end of each day are automatically returned to the San Pedro Main

Account and then transferred to the MPO Operating Account.


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D. The MEMP Services Accounts

17. MEMP Services maintains three Zero-Balance Accounts ending in 0902

(the “MEMP Services Main Account”), 0910 (the “MEMP Services Payroll Account”), and

1926 (the “MEMP Services A/P Account”), respectively. The MEMP Services Main Account

is funded by intercompany disbursements from the MPO Operating Account and is used (i) to

make disbursements to the MEMP Services Payroll Account and the MEMP Services A/P

Account and (ii) to make certain payroll disbursements by wire transfer. Any funds remaining in

the MEMP Services Main Account at the end of each day are automatically returned to the MPO

Operating Account.

18. The MEMP Services Payroll Account and the MEMP Services A/P

Account function like the Beta A/P Account and the San Pedro A/P Account. They are funded

as needed by intercompany disbursements from the MEMP Services Main Account. The MEMP

Services Payroll Account is used to make most of the Debtors’ payroll and benefits

disbursements by reverse wire transfers (i.e. funds drawdown requests) to a deposit account held

by ADP, the Debtors’ payroll processor. The MEMP Services A/P Account is used to make

disbursements to employees and other third parties by ACH or check on account of employee

expense reimbursements and certain employee benefit obligations. Any funds remaining in the

MEMP Services Payroll Account or the MEMP Services A/P Account at the end of each day are

automatically returned to the MEMP Services Main Account and then transferred to the MPO

Operating Account.

E. Bank Fees

19. In the ordinary course of their business, the Debtors incur and pay, honor,

or allow to be deducted from the appropriate Bank Accounts certain service charges and other


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fees, costs, and expenses charged by Wells Fargo and other financial institutions (collectively,

the “Bank Fees”). The Bank Fees collectively average approximately $7,000 per month.

F. The Debtors’ Corporate Payment Cards

20. In the ordinary course of business, the Debtors maintain Corporate Credit

Cards that are issued by the Credit Card Provider. The Credit Card Provider extends credit and

purchasing cards to certain employees of the Debtors, which those employees use to pay for

business-related expenses such as travel, lodging, meals, fuel, and other reasonable and

documented expenses incurred in operating the Debtors’ business. Approximately 28 employees

hold Corporate Credit Cards. The invoices for the Corporate Credit Cards are paid by the

Debtors via direct debit on a monthly basis. The Debtors estimate they incur liabilities of

approximately $40,000 per month on account of the Corporate Credit Cards and that, as of the

Petition Date, less than $10,000 in prepetition amounts is owed on account of the Corporate

Credit Cards. Prior to the Petition Date, the MPO Cash Collateral Account was funded in the

amount of $150,000 to secure the Debtors’ monthly payment obligations to the Credit Card

Provider.

21. In the ordinary course of business, the Debtors also maintain V-Cards and

Fuel Cards (the “Fuel Cards”; collectively, with the Corporate Credit Cards and the V-Cards,

the “Corporate Payment Cards”). The V-Cards function as single-use virtual credit cards. The

V-Cards are issued by a third-party vendor, SunGard (in such capacity, the “V-Card Provider”),

which also processes the Debtors’ V-Card payments. When the Debtors need to make a payment

by V-Card, the V-Card Provider provides the payment recipient with a single-use virtual credit

card number. Shortly thereafter, the V-Card Provider debits the payment amount from the

Debtors’ applicable Bank Account. Each V-Card can be used only once and expires if not used

within a certain period of time. The Debtors estimate they incur liabilities of approximately


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$1.2 million per month on account of the V-Cards, in addition to nominal maintenance and

transaction fees charged by the V-Card Provider. Because the Bank Accounts from which the V-

Card payments are debited are fully funded, the Debtors do not owe any prepetition amounts on

account of the V-Cards.

22. The Fuel Cards function like the Corporate Credit Cards but, unlike the

Corporate Credit Cards, the Fuel Cards are used solely to pay for fuel for the Debtors’ vehicles

used in the field. The Fuel Cards are issued by Exxon (in such capacity, the “Fuel Card

Provider”). As of the Petition Date, the Debtors maintain 112 Fuel Cards. Each Fuel Card is

‘tagged’ to a particular vehicle. Employees must be authorized to use the Fuel Cards. As of the

Petition Date, 187 employees are authorized to use the Fuel Cards. Payments on account of the

Fuel Cards are disbursed from the MPO Operating Account. The Debtors estimate they incur

liabilities of approximately $20,000 per month on account of the Fuel Cards and that

approximately $18,000 in prepetition amounts is payable on account of the Fuel Cards.

G. The Debtors’ Existing Business Forms

23. In the ordinary course of business, the Debtors use a variety of

correspondence and business forms, including, among other things, checks, purchase orders,

invoices, and letterhead (collectively, the “Business Forms”). To minimize expenses, the

Debtors seek authority to continue using all Business Forms substantially in the forms used

immediately prior to the commencement of these chapter 11 cases, without reference to the

Debtors’ status as debtors in possession. The Debtors have prepared communications for the

various parties with which they conduct business, which will, among other things, notify such

parties of the commencement of these chapter 11 cases. The Debtors believe that these

communications will provide adequate notice of the Debtors’ status as debtors in possession.

Nevertheless, the Debtors will use reasonable efforts to have electronic checks include the legend


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referring to the Debtors as “Debtors In Possession” as soon as practicable, and if the Debtors

generate new paper checks during the pendency of these chapter 11 cases, such checks shall

include a legend referring to the Debtors as “Debtors In Possession.”

Continuation of the Cash Management System Is in the Best Interests of the Debtors and All Other Parties in Interest

24. The efficient and economical operation of the Debtors’ businesses requires

that the Cash Management System continue during the pendency of these chapter 11 cases. As a

practical matter, it would be difficult and expensive to establish and maintain a separate cash

management system for each Debtor. Further, requiring the Debtors to adopt new, segmented

cash management systems at this early and critical stage of these cases would be expensive,

create unnecessary administrative burdens, and be extraordinarily disruptive to their business

operations. Any such disruption would have a severe and adverse impact upon the Debtors’

reorganization efforts. Accordingly, the Debtors seek authority to continue using the Cash

Management System in the same manner as the Cash Management System was utilized prior to

the Petition Date and to implement ordinary-course changes to it consistent with past practice.

The Bankruptcy Code provides for such relief.

25. Section 363(c)(1) of the Bankruptcy Code authorizes the debtor in

possession to “use property of the estate in the ordinary course of business without notice or a

hearing.” The purpose of section 363(c)(1) is to provide a debtor in possession with the

flexibility to engage in the ordinary transactions required to operate its business without

unneeded oversight by its creditors or the court. See In re HLC Properties, Inc., 55 B.R. 685,

686 (Bankr. N.D. Tex. 1985) (finding “no need to further burden the docket or the staff of the

Court with a superfluous order” when a transaction is in the ordinary course of business); Med.

Malpractice Ins. Ass’n v. Hirsch (In re Lavigne), 114 F.3d 379, 384 (2d Cir. 1997); Chaney v.


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Official Comm. of Unsecured Creditors of Crystal Apparel, Inc. (In re Crystal Apparel, Inc.),

207 B.R. 406, 409 (S.D.N.Y. 1997). Included within the purview of section 363(c) is a debtor’s

ability to continue the “routine transactions” necessitated by a debtor’s cash management system.

Amdura Nat’l Distrib. Co. v. Amdura Corp. (In re Amdura Corp.), 75 F.3d 1447, 1453 (10th Cir.

1996). A cash management system allows a debtor “to administer more efficiently and

effectively its financial operations and assets.” In re Southmark Corp., 49 F.3d 1111, 1114 (5th

Cir. 1995). Accordingly, 363(c)(1) authorizes continuation of the Cash Management System as

it operated prepetition without this court’s approval.

26. Even if continuation of the Cash Management System and other relief

requested herein were outside of the ordinary course of business, the Court may grant such relief

pursuant to section 363(b) of the Bankruptcy Code. Section 363(b) of the Bankruptcy Code

provides, in relevant part, that “[t]he [debtor], after notice and a hearing, may use, sell, or lease,

other than in the ordinary course of business, property of the estate . . . .” 11 U.S.C. § 363(b)(1).

Under section 363 of the Bankruptcy Code, a court may authorize a debtor to pay certain

prepetition claims where a sound business purposes exists for doing so. See In re BNP

Petroleum Corp., 642 F. App’x. 429, 435 (5th Cir. 2016); In re Cont'l Air Lines, Inc., 780 F.2d

1223, 1226 (5th Cir. 1986). In applying the business judgment rule, “courts are adjured to defer

to the debtor in possession or trustee; if a valid business reason is shown for a transaction, the

transaction is to be presumed appropriate.” In re Pilgrim's Pride Corp., 401 B.R. 229, 237

(Bankr. N.D. Tex. 2009).

27. The Court may also rely on its equitable powers to grant the relief

requested in this Motion. Section 105(a) of the Bankruptcy Code empowers the Court to “issue

any order, process, or judgment that is necessary or appropriate to carry out the provisions of this


15

title.” 11 U.S.C. § 105(a). Accordingly, the Court may authorize the continuation of the Cash

Management System because such relief is necessary for the Debtors to carry out their fiduciary

duties under sections 1107(a) and 1108 of the Bankruptcy Code. Pursuant to sections 1107(a)

and 1108, debtors in possession are fiduciaries holding the bankruptcy estate and operating the

business for the benefit of their economic stakeholders. See In re CoServ, L.L.C., 273 B.R. 487,

497 (Bankr. N.D. Tex. 2002). Consistent with such fiduciary duties, courts have authorized

payment of prepetition obligations where a sound business purpose justifies the payment of such

claims.

28. Courts in this district have approved postpetition continuation of debtors’

prepetition cash management systems as a routine matter in similar cases. See, e.g., In re Ultra

Petroleum Corp., Ch. 11 Case No. 16-32202 (MI) (Bankr. S.D. Tex. May 3, 2016), (ECF No.

382); In re Midstates Petroleum Co., Ch. 11 Case No. 16-32237 (DRJ) (Bankr. S.D. Tex. May 2,

2016), (ECF No. 65); In re Sherwin Alumina Co., Ch. 11 Case No. 16-20012 (DRJ) (Bankr. S.D.

Tex. Jan. 13, 2016), (ECF No. 79); In re RAAM Global Energy Co., Ch. 11 Case No. 15-35615

(MI) (Bankr. S.D. Tex. Nov. 18, 2015), (ECF No. 126). The same relief is appropriate here.

Accordingly, the Court should authorize the Debtors to continue the Cash Management System.

Continued Performance of Intercompany Transactions Is Warranted, and Intercompany Claims Should Be Granted Administrative Expense Status

29. As stated above, under section 363(c)(1) of the Bankruptcy Code, a debtor

in possession “may enter into transactions, including the sale or lease of property of the estate, in

the ordinary course of business . . . and may use property of the estate in the ordinary course of

business without notice or a hearing.” Further, under section 503(b)(1)(A) of the Bankruptcy

Code, “[a]fter notice and a hearing, there shall be allowed, administrative expenses . . . including

the actual, necessary costs and expenses of preserving the estate . . . .”


16

30. The Debtors believe that they do not require the Court’s approval to

continue entering into and performing under their intercompany transactions. The Debtors enter

into and perform under intercompany transactions “in the ordinary course of business” within the

meaning of section 363(c)(1). Intercompany transactions are not just a matter of routine in the

Debtors’ business: they are the sorts of transactions that are common among many business

enterprises that operate through multiple affiliates. It is precisely because of their routine nature

that the intercompany transactions are integral to the Debtors’ ability to operate their business

and successfully emerge from these chapter 11 cases. Accordingly, out of an abundance of

caution, the Debtors request express authority to engage in such transactions postpetition.

31. The Debtors also request that the Court grant administrative expense status

to all intercompany claims against a Debtor by another Debtor or non-Debtor affiliate that arise

postpetition as a result of an intercompany transaction; provided, however, that nothing herein

shall authorize the payment by any of the Debtors of prepetition or postpetition obligations owed

by any of the Debtors inconsistent with the Debtors’ past practices. If intercompany claims are

accorded such status, each entity using funds that flow through the Cash Management System

will continue to bear the ultimate responsibility for its ordinary-course transactions with

affiliates.

32. Courts in this district have granted administrative expense status to

postpetition intercompany claims in similar cases. See, e.g., In re Ultra Petroleum Corp., Ch. 11

Case No. 16-32202 (MI) (Bankr. S.D. Tex. May 3, 2016), (ECF No. 382); In re Energy XXI,

LTD, Ch. 11 Case No. 16-31928 (DRJ) (Bankr. S.D. Tex. Apr. 15, 2016), (ECF No. 881); In re

Sherwin Alumina Co., Ch. 11 Case No. 16-20012 (DRJ) (Bankr. S.D. Tex. Jan. 13, 2016), (ECF


17

No. 79); In re RAAM Global Energy Co., Ch. 11 Case No. 15-35615 (MI) (Bankr. S.D. Tex.

Nov. 18, 2015), (ECF No. 126). For the reasons set forth above, similar relief is warranted here.

The Court Should Authorize the Debtors to Maintain Their Corporate Payment Cards and to Pay All Obligations Related Thereto

33. As stated above, under section 363(c)(1) of the Bankruptcy Code, a debtor

in possession “may enter into transactions, including the sale or lease of property of the estate, in

the ordinary course of business . . . and may use property of the estate in the ordinary course of

business without notice or a hearing.” Furthermore, section 364(a) of the Bankruptcy Code

permits a debtor in possession to “obtain unsecured credit and incur unsecured credit in the

ordinary course of business” without a court order. Purchases made using the Corporate

Payment Cards fall within the ordinary course of business under section 363(c)(1). The use of

corporate credit cards and similar payment methods is widespread at companies across the

United States as a means of facilitating day-to-day business activities. As a result, the Debtors

believe that they do not require the Court’s approval to continue using the Corporate Payment

Cards.

34. The Debtors request authority to continuing using the Corporate Payment

Cards in the ordinary course of business, and to pay all obligations (including outstanding

prepetition obligations in the amount of $28,000) related thereto. Yet, in the event the Court

finds that such transactions do not fall within the ordinary course of business, the Debtors request

authority pursuant to sections 105(a) and 363(b)(1) of the Bankruptcy Code.

35. Continued use of the Corporate Payment Cards is integral to the success

and stability of the Debtors’ business. The Debtors’ business operations span the southern and

western United States, including offshore southern California. As a result, Debtors rely on the

ability of their employees to pay for travel expenses and to make other reasonable work-related


18

purchases necessary to fulfill their day-to-day professional obligations. Permitting the Debtors

to continue using the Corporate Payment Cards will ensure that the Debtors’ employees are able

to fulfill their daily professional obligations and, in turn, prevent significant disruption to the

Debtors’ business operations.

36. Courts in this district have permitted debtors to continue using their

existing corporate credit cards and similar purchasing programs. See, e.g., In re CJ Holding Co.,

Ch. 11 Case No. 16-33590 (DRJ) (Bankr. S.D. Tex. July 7, 2016), (ECF No. 66); In re Ultra

Petroleum Corp., Ch. 11 Case No. 16-32202 (MI) (Bankr. S.D. Tex. May 3, 2016), (ECF No.

292). The same relief is appropriate here. Accordingly, the Court should authorize the Debtors

to continue using the Corporate Payment Cards and to pay all obligations, including prepetition

obligations, related thereto.

The Court Should Authorize the Debtors to Pay Prepetition Bank Fees

37. The Court should authorize the Debtors to pay Bank Fees and similar

service charges incurred prior to the commencement of these chapter 11 cases. As the CoServ

court stated, “it is only logical that the bankruptcy court be able to use § 105(a) of the

Bankruptcy Code to authorize satisfaction of the prepetition claim in aid of preservation or

enhancement of the estate.” CoServ, 273 B.R. at 497.

38. Here, payment of the prepetition Bank Fees is in the best interests of the

Debtors and all parties in interest in these cases because it will prevent any disruption to the Cash

Management System. Further, because Wells Fargo likely has setoff rights for the Bank Fees,

payment of prepetition Bank Fees should not alter the rights of unsecured creditors in these

chapter 11 cases. Accordingly, the court should authorize the Debtors to pay any outstanding

prepetition Bank Fees and similar service charges to maintain the Cash Management System.


19

Maintenance of the Debtors’ Existing Bank Accounts and Business Forms Is Warranted

39. The Debtors request that the Court waive the requirements of the UST

Operating Guidelines, which would require, among other things, the closure of the Bank

Accounts, the opening of new deposit accounts, and the immediate ordering of new business

forms with a legend identifying each of the Debtors as “Debtor in Possession.” These chapter 11

cases will be more orderly if the Debtors are permitted to maintain all Bank Accounts with the

same account numbers during these cases. By preserving business continuity and avoiding the

disruption and delay to the Debtors’ disbursement obligations, all parties in interest, including

employees, vendors, and customers, will be best served by the relief requested herein. In

addition, to the extent necessary, the Debtors request authority to make ordinary-course changes

to the Cash Management System, such as opening or closing their accounts in accordance with

the Debtors’ prepetition practices.

40. To minimize expenses, the Debtors further request authority to continue to

use their Business Forms substantially in the forms existing immediately prior to the

commencement of these chapter 11 cases, without reference to their status as debtors in

possession. The Debtors will use reasonable efforts to have electronic checks include the legend

referring to the Debtors as “Debtors in Possession” as soon as practicable, and if the Debtors

generate new checks during the pendency of these chapter 11 cases, such checks shall include a

legend referring to the Debtors as “Debtors In Possession.” Because parties doing business with

the Debtors undoubtedly will be aware of the Debtors’ status as debtors in possession as a result

of the publicized nature of these chapter 11 cases and the notice of commencement that the

Debtors will distribute to parties in interest, changing the Business Forms, except as noted above,

would be unnecessary and unduly burdensome.


20

41. Courts in this district and in other districts have granted debtors similar

relief in numerous other complex chapter 11 cases. See, e.g., In re Ultra Petroleum Corp., Ch.

11 Case No. 16-32202 (MI) (Bankr. S.D. Tex. May 3, 2016), (ECF No. 382); In re Midstates

Petroleum Co., Ch. 11 Case No. 16-32237 (DRJ) (Bankr. S.D. Tex. May 2, 2016), (ECF No. 65);

In re Energy XXI, LTD, Ch. 11 Case No. 16-31928 (DRJ), (Bankr. S.D. Tex. Apr. 15, 2016),

(ECF No. 881); In re Sherwin Alumina Co., Ch. 11 Case No. 16-20012 (DRJ) (Bankr. S.D. Tex.

Jan. 13, 2016), (ECF No. 79). The same relief is also appropriate here.

Cause Exists to Extend the Time to Comply with Section 345(b) of the Bankruptcy Code

42. Section 345 of the Bankruptcy Code governs a debtor’s cash deposits

during a chapter 11 case and authorizes deposits of money as “will yield the maximum

reasonable net return on such money, taking into account the safety of such deposit or

investment.” For deposits that are not “insured or guaranteed by the United States or by a

department, agency, or instrumentality of the United States or backed by the full faith and credit

of the United States,” section 345(b) requires the debtor to obtain from the entity with which the

money is deposited a bond in favor of the United States and secured by the undertaking of an

adequate corporate surety, unless the Court for cause orders otherwise. Alternatively, the debtor

may require the entity to deposit governmental securities pursuant to 31 U.S.C. § 9303. Section

9303 provides that when a person is required by law to give a surety bond, that person, in lieu of

a surety bond, may instead provide an eligible obligation, designated by the Secretary of the

Treasury, as an acceptable substitute for a surety bond.

43. Investment of cash in strict compliance with the requirements of section

345(b) would, in large chapter 11 cases such as these, be inconsistent with section 345(a), which

permits a debtor in possession to make such investments of money of the estate “as will yield the


21

maximum reasonable net return on such money.” Thus, in 1994, to avoid “needlessly

handcuff[ing] larger, more sophisticated debtors,” Congress amended section 345(b) to provide

that its strict investment requirements may be waived or modified if the Court so orders “for

cause.” 140 Cong. Rec. H 10,767 (Oct. 4, 1994), 1994 WL 545773.

44. As stated above, all of the Debtors’ active Bank Accounts are maintained

with Wells Fargo, a bank that has been approved by the U.S. Trustee as an Authorized

Depository under the UST Operating Guidelines. Consequently, if funds in any of the Bank

Accounts exceed amounts insured by the Federal Deposit Insurance Corporation, the Debtors

propose to engage in discussions with the U.S. Trustee to determine what modifications to those

Bank Accounts, if any, are necessary under the circumstances.

45. To enable such discussions, if they become necessary, the Debtors request

a 45-day extension (or such additional time to which the U.S. Trustee may agree or as the Court

may approve) of the time in which to either comply with section 345(b), make alternative

acceptable arrangements, or to seek a waiver of section 345(b), subject to the Court’s approval.

See In re Serv. Merchandise Co., Inc., 240 B.R. 894, 896 (Bankr. M.D. Tenn. 1999) (noting that

one of the factors to consider in determining whether cause exists “for relief from the strictures

of § 345(b)” is whether benefits to the debtors outweigh the harm, if any, to the estate).

46. Courts in this district have previously granted similar relief in other

complex chapter 11 cases. See, e.g., In re Ultra Petroleum Corp., Ch. 11 Case No. 16-32202

(MI) (Bankr. S.D. Tex. May 3, 2016), (ECF No. 382); In re Energy XXI, LTD, Ch. 11 Case No.

16-31928 (DRJ) (Bankr. S.D. Tex. Apr. 15, 2016), (ECF No. 881); In re Sherwin Alumina Co.,

Ch. 11 Case No. 16-20012 (DRJ) (Bankr. S.D. Tex. Jan. 13, 2016), (ECF No. 79); In re RAAM

Global Energy Co., Ch. 11 Case No. 15-35615 (MI) (Bankr. S.D. Tex. Nov. 18, 2015), (ECF No.


22

126). Accordingly, the Debtors request the 45-day extension set forth above (or such additional

term) to comply with section 345(b), make other acceptable arrangements, or seek a waiver of

345(b), subject to this Court’s approval.

Request for Waiver of Rule 7(B) of the Complex Chapter 11 Guidelines

47. The Procedures for Complex Chapter 11 Bankruptcy Cases for the United

States Bankruptcy Court for the Southern District of Texas (the “Complex Case Procedures”)

require, among other things, that debtors who own or operate oil, gas, or mineral leases maintain

a segregated account for funds received after the petition date that are attributable to overriding

royalties, working interest owners, and third parties (the “Royalty Payments”).

48. The Debtors have requested that the funds attributable to the Royalty

Payments be paid by the Debtors postpetition in the ordinary course of business pursuant to the

Emergency Motion of Debtors Pursuant to 11 U.S.C. §§ 105(a) and 363(b) for Interim and Final

Orders (I) Authorizing Debtors to Pay Joint Interest Billings, Interest Owner Payments, and

E&P Operating Expenses in the Ordinary Course, and (II) Authorizing Financial Institutions to

Honor and Process Checks and Transfers Related to Such Obligations (the “E&P/JIB

Motion”). The Debtors’ existing practice with respect to Royalty Payments that are due and

owing but are otherwise unpayable is to designate such payments in their operating accounts as

amounts to be held in suspense. As more fully described in the E&P/JIB Motion, the Debtors

hold Royalty Payments in “suspense” when (i) they are too small to warrant payment under the

terms of the applicable operating agreement or other applicable operating instruments, (ii) the

Debtors have determined they should not be paid because of a dispute or for other legal reasons,

or (iii) the Debtors are unable to identify or properly pay the relevant interest owner.


23

49. Requiring the Debtors to implement new procedures for the segregation of

all Royalty Payments at this early and critical stage would be expensive, impose needless

administrative burdens, and cause undue disruption to the Debtors and their estates. Any such

disruption would adversely, and perhaps irreparably, impact the Debtors’ ability to reorganize

and maximize value of their estates for the benefit of the Debtors’ creditors and other parties in

interest. Moreover, such a disruption would be wholly unnecessary because the Debtors’

existing practice with respect to the Royalty Payments already allows the Debtors to hold and

disburse, in the ordinary course of business, (a) funds that are attributable to overriding royalties,

working interest owners, or third parties, including amounts in suspense and (b) amounts

received prepetition that are held in suspense. Accordingly, maintaining the existing Cash

Management System without disruption is both essential to the Debtors’ ongoing operations and

in the best interests of the Debtors, their estates, and all interested parties.

50. Courts in this district have recently granted such relief to similarly situated

debtors in other complex chapter 11 cases. See, e.g., In re Stone Energy Corp., Ch. 11 Case No.

16-36390 (MI) (Bankr. S.D. Tex. Dec. 14, 2016), (ECF No. 75) (waiving the requirements of

Rule 7(b) of the Complex Case Procedures); In re Linn Energy, LLC, Ch. 11 Case No. 16-60040

(DRJ) (Bankr. S.D. Tex. May 5, 2016), (ECF No. 731) (same). The same relief is appropriate

here.

Bankruptcy Rule 6003 Has Been Satisfied

51. Bankruptcy Rule 6003 provides that, to the extent relief is necessary to

avoid immediate and irreparable harm, a bankruptcy court may issue an order granting “a motion

to use, sell, lease, or otherwise incur an obligation regarding property of the estate, including a

motion to pay all or part of a claim that arose before the filing of the petition” before 21 days

after filing of the petition. Here, the ability to use the Cash Management System and obtain the


24

other relief requested herein is necessary to avoid the immediate and irreparable harm that would

otherwise result from any interruption of the flow of funds through the enterprise. Indeed, the

failure to receive the requested relief during the first 21 days of the chapter 11 cases would

severely disrupt the Debtors’ operations and significantly impact the Debtors’ ability to

reorganize swiftly and efficiently. Accordingly, the Debtors have satisfied the requirements of

Bankruptcy Rule 6003.

Request for Bankruptcy Rule 6004 Waivers

52. The Debtors request a waiver of the notice requirements under Bankruptcy

Rule 6004(a) and any stay of the order granting the relief requested herein pursuant to

Bankruptcy Rule 6004(h). As explained above and in the Stillwell Declaration, the relief

requested herein is necessary to avoid immediate and irreparable harm to the Debtors.

Accordingly, ample cause exists to justify waiver of the notice requirements under Bankruptcy

Rule 6004(a) and the 14-day stay imposed by Bankruptcy Rule 6004(h), to the extent such stay

applies.


25

Reservation of Rights

53. Nothing contained herein is intended to be or shall be construed as (i) an

admission as to the validity of any claim against the Debtors, (ii) a waiver of the Debtors’ or any

party in interest’s rights to dispute any claim, (iii) a waiver of the Debtors’ or any other party in

interest’s rights under the Bankruptcy Code or any other applicable law, or (iv) an approval or

assumption of any agreement, contract, program, policy, or lease under section 365 of the

Bankruptcy Code. Likewise, if the Court grants the relief sought herein, any payment made

pursuant to the Court’s order is not intended to be and should not be construed as an admission to

the validity of any claim or a waiver of the Debtors’ or any party in interest’s rights to dispute

such claim subsequently.

Notice

54. No trustee, examiner, or statutory committee of creditors has been

appointed in these chapter 11 cases. Notice of this Motion has been provided to (i) the Office of

the United States Trustee for Region 7; (ii) the Debtors’ 30 largest unsecured creditors on a

consolidated basis; (iii) Wells Fargo Bank, National Association, as administrative agent (the

“Prepetition Agent”) under that certain Credit Agreement, dated as of December 14, 2011, as

amended; (iv) Linklaters LLP, 1345 Avenue of the Americas, New York, New York 10105

(Attn: Margot Schonholtz, Esq. and Penelope Jensen, Esq.) as counsel to the Prepetition Agent;

(v) Vinson & Elkins LLP, 2001 Ross Avenue, Suite 3700, Dallas, TX 75201 (Attn: Paul Heath,

Esq. and Bradley Foxman, Esq.) as counsel to the Prepetition Agent; (vi) Davis Polk &

Wardwell LLP, 450 Lexington Avenue, New York, NY 10017 (Attn: Brian Resnick, Esq. and

Angela Libby, Esq.) as counsel to the ad hoc group of unsecured noteholders; (vii) Wilmington

Trust, National Association, as successor trustee under (a) that certain Indenture, dated as of


26

April 17, 2013, for the issuance of 7 5/8% Senior Notes due 2021, as amended and

supplemented, and (b) that certain Indenture, dated as of July 17, 2014, for the issuance of 6

7/8% Senior Notes due 2022, as amended and supplemented; (viii) Stroock & Stroock & Lavan

LLP, 180 Maiden Lane, New York, New York 10038 (Attn: Erez E. Gilad, Esq.) as counsel to

Wilmington Trust, National Association; (ix) the Securities and Exchange Commission; (x) the

Internal Revenue Service; (xi) the United States Attorney’s Office for the Southern District of

Texas; and (xii) those persons who have formally appeared in these chapter 11 cases and

requested service pursuant to Bankruptcy Rule 2002.

55. In addition to the foregoing, notice of this Motion and any order entered

hereon will be served on all parties required by Local Rule 9013-1(d) (collectively with the

parties listed in the preceding paragraph, the “Notice Parties”). Based on the urgency of the

circumstances surrounding this Motion and the nature of the relief requested herein, the Debtors

respectfully submit that no further notice is required.


27

WHEREFORE the Debtors respectfully request entry of the Proposed Interim

Order and Proposed Final Order granting the relief requested herein and such other and further

relief as the Court may deem just and appropriate

Dated: January 16, 2017 Houston, Texas

/s/ Alfredo R. Pérez WEIL, GOTSHAL & MANGES LLP Alfredo R. Pérez (15776275) 700 Louisiana Street, Suite 1700 Houston, Texas 77002 Telephone: (713) 546-5000 Facsimile: (713) 224-9511 -and- WEIL, GOTSHAL & MANGES LLP Gary T. Holtzer (pro hac vice pending) Joseph H. Smolinsky (pro hac vice pending) 767 Fifth Avenue New York, New York 10153 Telephone: (212) 310-8000 Facsimile: (212) 310-8007

Proposed Attorneys for the Debtors and Debtors in Possession


Certificate of Service

I hereby certify that a true and correct copy of the foregoing document was served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas, and will be served as set forth in the Affidavit of Service to be filed by the Debtors’ proposed claims, noticing, and solicitation agent.

/s/ Alfredo R. Pérez WEIL, GOTSHAL & MANGES LLP Alfredo R. Pérez (15776275) 700 Louisiana Street, Suite 1700 Houston, Texas 77002 Telephone: (713) 546-5000 Facsimile: (713) 224-9511


Exhibit A

Proposed Interim Order



HOUSTON DIVISION

§ In re: § Chapter 11 § MEMORIAL PRODUCTION § Case No. 17-______ (___) PARTNERS LP, et al., § § (Jointly Administered) Debtors.1 § § Re: Docket No. ___

INTERIM ORDER PURSUANT TO 11 U.S.C. §§ 105(a), 345(b), 363(b)(1), 363(c)(1),

AND 364(a) AND FED. R. BANKR. P. 6003 AND 6004 (I) AUTHORIZING DEBTORS TO (A) CONTINUE EXISTING CASH MANAGEMENT SYSTEM, (B) MAINTAIN BUSINESS FORMS AND EXISTING BANK ACCOUNTS, (C) CONTINUE INTERCOMPANY

ARRANGEMENTS, AND (D) CONTINUE USING CORPORATE PAYMENT CARDS; (II) EXTENDING TIME TO COMPLY WITH, OR SEEK WAIVER OF, THE REQUIREMENTS OF 11 U.S.C. § 345(b); (III) WAIVING

THE REQUIREMENTS OF RULE 7B OF THE PROCEDURES FOR COMPLEX CHAPTER 11 BANKRUPTCY CASES; AND (IV) GRANTING RELATED RELIEF

Upon the motion, dated January 16, 2017 (the “Motion”),2 of Memorial

Production Partners LP (“MEMP”) and its debtor affiliates, as debtors and debtors in possession

(collectively, the “Debtors”), for (i) interim and final authority to (a) continue their existing cash

management system; (b) continue using their existing Business Forms and Bank Accounts;

(c) continue their intercompany arrangements; and (d) continue using their Corporate Payment


2 All capitalized terms, used but not otherwise defined herein, shall have the meanings ascribed to them in the Motion.


2

Cards, each in the ordinary course and consistent with past practices; (ii) extension of time to

comply with, or to seek a waiver of, the requirements of section 345(b) of the Bankruptcy Code;

(iii) a waiver of Rule 7B of the Complex Chapter 11 Guidelines; and (iv) related relief, each as

more fully set forth in the Motion; and upon consideration of the Stillwell Declaration; and the

Court having jurisdiction to consider the Motion and the relief requested therein pursuant to 28

U.S.C. §§ 157 and 1334, and the Order of Reference to Bankruptcy Judges, General Order 2012-

6 (S.D. Tex. May 24, 2012) (Hinojosa, C.J.); and consideration of the Motion and the requested

relief being a core proceeding pursuant to 28 U.S.C. § 157(b); and venue being proper before this

Court pursuant to 28 U.S.C. §§ 1408 and 1409; and due and proper notice of the Motion having

been provided to the Notice Parties, and it appearing that no other or further notice need be

provided; and the Court having reviewed the Motion; and the Court having held a hearing on the

Motion on _____________________, 2017; and the Court having determined that the legal and

factual bases set forth in the Motion establish just cause for the relief granted herein; and it

appearing that the relief requested in the Motion is in the best interests of the Debtors and their

respective estates and creditors; and the Court having found and determined that the relief sought

in the Motion is necessary to avoid immediate and irreparable harm to the Debtors and their

estates as contemplated by Bankruptcy Rule 6003; and upon all of the proceedings had before

the Court and after due deliberation and sufficient cause appearing therefor,

IT IS HEREBY ORDERED THAT:

1. The Motion is granted on an interim basis as provided herein.

2. Pursuant to sections 105(a) and 363(c) of the Bankruptcy Code, the

Debtors are authorized to continue to manage their cash pursuant to the Cash Management

System maintained by the Debtors before the Petition Date and to collect and disburse cash in


3

accordance with the Cash Management System, including intercompany funding to Debtor and

non-Debtor affiliates.

3. The Debtors and Wells Fargo or any other bank or financial institution

may, without further order of this Court, agree to and implement changes to the Cash

Management System and procedures in the ordinary course of business and consistent with past

practices.

4. Pursuant to section 105(a) of the Bankruptcy Code, Wells Fargo and other

banks and financial institutions are authorized to continue to honor transfers, as directed by the

Debtors, of funds among the Bank Accounts and to the Debtors and their non-Debtor affiliates.

5. The Debtors are authorized, in the ordinary course, to continue to honor

prepetition and postpetition intercompany obligations to subsidiaries and affiliates (Debtor and

non-Debtor) in accordance with their prepetition practices. Intercompany claims against a

Debtor by another Debtor or non-Debtor affiliate that arise postpetition as a result of an

intercompany transaction are granted administrative expense status.

6. The Debtors shall maintain accurate records of all transfers within the

Cash Management System so that all postpetition transfers and transactions shall be adequately

and promptly documented in, and readily ascertainable from, their books and records, to the

same extent maintained by the Debtors before the Petition Date. Upon the request of the

Prepetition Agent with reasonable advance notice, the Debtors shall permit the Prepetition Agent

to inspect their records with respect to such postpetition transfers and transactions.

7. The Debtors are authorized to: (i) designate, maintain, and continue to use

any or all of their existing Bank Accounts listed on Schedule 1 annexed hereto (which shall be

promptly amended to identify any Bank Accounts inadvertently omitted therefrom, with any


4

such amendments being served on the U.S. Trustee, the Prepetition Agent, and any statutory

committee appointed in these chapter 11 cases), in the names and with the account numbers

existing immediately before the Petition Date, (ii) deposit funds in and withdraw funds from

such accounts by all usual means, including, without limitation, checks, wire transfers,

automated clearinghouse transfers, and other debits, (iii) pay any Bank Fees or other service

charges associated with the Bank Accounts or the Corporate Payment Cards, whether arising

before or after the Petition Date, and (iv) treat their Bank Accounts for all purposes as debtors in

possession accounts.

8. Except as otherwise provided in this Order, Wells Fargo and other

applicable banks or other applicable financial institutions are authorized and directed to continue

to maintain, service, and administer the Bank Accounts without interruption and in the usual and

ordinary course, and to receive, process, honor, and pay all checks, drafts, wires, or other

transfers by the holders or makers thereof, as the case may be, to the extent that Debtors have

sufficient funds standing to their credit with such bank or financial institution; provided, that

nothing contained herein shall (i) require Wells Fargo or any other applicable bank or applicable

financial institution to honor any check, ACH transfer, draft wire, or other transfer unless the

account has good and collected funds at the time of the requested action or (ii) authorize Wells

Fargo or any other bank or financial institution to honor any check, ACH transfer, draft, wire, or

other transfer issued or dated before the Petition Date, except as otherwise provided herein or by

other order of this Court. Wells Fargo and any other banks or financial institutions are

authorized to rely upon and accept and honor all representations and instructions from the

Debtors as to which check, ACH transfer, draft, wire, or other transfer drawn or issued by the

Debtors before the Petition Date should be honored pursuant to an order of this Court, and such


5

financial institutions shall not have any liability to any party for (a) relying on this Interim Order

or the representations or instructions by the Debtors as provided for herein or any other order of

this court or (b) honoring or not honoring any check, ACH transfer, draft, wire, or other transfer

in a good-faith belief that the Court has or has not authorized the honoring of such check, ACH

transfer, draft, wire, or other such transfer.

9. Wells Fargo and any other banks or financial institutions are authorized to

debit the Debtors’ accounts in the ordinary course of business without the need for further order

of this Court for: (i) all checks drawn on the Debtors’ accounts which are cashed or exchanged

for cashier’s checks by the payees thereof prior to the Petition Date; (ii) all checks or other items

deposited in one of the Debtors’ accounts prior to the Petition Date which have been dishonored

or returned unpaid for any reason, together with any fees and costs in connection therewith, to

the same extent the Debtors were responsible for such items prior to the Petition Date; and

(iii) all amounts outstanding as of the date hereof, if any, owed to Wells Fargo or any other bank

or financial institution as service charges for the maintenance of the Cash Management System,

including, without limitation, any Bank Fees or other service charges associated with the Bank

Accounts or the Corporate Payment Cards, whether arising before or after the Petition Date.

10. Those certain existing deposit agreements and Corporate Payment Card

agreements between the Debtors, on the one hand, and Wells Fargo or any other bank or

financial institution, on the other hand, shall continue to govern the postpetition cash

management relationship between such parties, and all of the provisions of such agreements,

including, without limitation, the termination and fee provisions, shall remain in full force and

effect.


6

11. The Debtors are authorized pursuant to 363(b) and 105(a) to continue

using their Corporate Payment Cards in the ordinary course and consistent with past practices,

and to pay all obligations (including prepetition obligations) related thereto; provided, however,

the Debtors’ use of the Corporate Credit Cards is subject to the terms expressed in paragraphs 12

and 13 below.

12. The Debtors are authorized to continue using the Corporate Credit Cards

in the ordinary course and consistent with past practices pursuant to the WellsOne Commercial

Card Agreement, dated on or around July 6, 2016 (as amended, restated, supplemented or

otherwise modified from time to time, the “Card Agreement”), between Wells Fargo (in such

capacity, the “Credit Card Provider”) and MPO subject to the terms and conditions thereof.

The Debtors’ obligations to the Credit Card Provider are secured by certain collateral (the

“Collateral”) in the MPO Cash Collateral Account pursuant to that certain Security Agreement:

Immediately Restricted Wells Fargo Bank, National Association Deposit Account, dated as of

January 13, 2017 (the “Security Agreement”), between the Credit Card Provider and MPO. In

accordance with the Security Agreement, the Credit Card Provider has and shall continue to have

a valid and perfected, non-avoidable first-priority lien on such Collateral and any proceeds

thereof. Such lien shall not be primed by any lien granted to any post-petition lender or other

person without the consent of the Credit Card Provider.

13. With respect to the Debtors’ use of Corporate Credit Cards, the Credit

Card Provider is authorized to make advances from time to time to MPO with a maximum

exposure at any time up to $150,000.00. The Debtors shall prepay all ACH transfers related to

the Corporate Credit Cards at least two (2) business days in advance of such transfer. The

Debtors are authorized and directed to pay all obligations, charges, and fees, including


7

prepetition obligations, charges, and fees, related to the Corporate Credit Cards. The Credit Card

Provider may rely on the representations of the Debtors with respect to its use of the Corporate

Credit Cards pursuant to the Card Agreement, and the Credit Card Provider shall not have any

liability to any party for relying on such representations by the Debtors as provided for herein.

14. The Debtors’ time to comply with section 345(b) of the Bankruptcy Code

is hereby extended for a period of 45 days from the date of this Order (the “Extension Period”);

provided, however, that such extension is without prejudice to the Debtors’ right to request a

further extension of the Extension Period or to seek a waiver of the section 345(b) of the

Bankruptcy Code in these cases.

15. The requirements of Rule 7(B) of the Complex Case Procedures are

hereby waived, and the Debtors are not required to establish separate accounts for cash collateral,

tax payments, or funds attributable to overriding royalties, working interest owners, and third

parties.

16. Nothing contained herein shall prevent the Debtors from opening any

additional deposit accounts, or closing any Bank Accounts, in the ordinary course, as they may

deem necessary and appropriate in consultation with the Prepetition Agent, and Wells Fargo and

other banks and financial institutions are authorized to honor the Debtors’ request to open or

close, as the case may be, Bank Accounts or additional bank accounts; provided, that any new

deposit account shall be with (i) a bank that is insured by the Federal Deposit Insurance

Corporation, organized under the laws of the United States, and designated as an Authorized

Depository under the UST Operating Guidelines or (ii) any other bank, as the Debtors may

determine, upon prior notice to the U.S. Trustee, the Prepetition Agent, and any statutory

committee appointed in these chapter 11 cases; provided, further, that all accounts opened by any


8

of the Debtors on or after the Petition Date at any bank shall, for purposes of this Order, be

deemed a Bank Account as if it had been listed on Schedule 1 hereto.

17. The Debtors are authorized to use their existing Business Forms and are

not required to (i) obtain new stock reflecting their status as debtors in possession, or (ii) print

“debtor in possession,” the Debtors’ chapter 11 case numbers, or other information on any of

their checks or wire transfers; provided, that the Debtors will use reasonable efforts to have

electronic checks include the legend referring to the Debtors as “Debtors in Possession” as soon

as practicable; provided, further, that if the Debtors generate new checks during the pendency of

these chapter 11 cases, such checks shall include a legend referring to the Debtors as “Debtors in

Possession.”

18. To the extent a bank or other financial institution in the ordinary course of

the Cash Management System incurs an overdraft or other event giving rise to an uncovered

debit, regardless of whether arising prepetition or postpetition, the financial institution shall be

authorized to cover the overdraft or debit from funds of the Debtors in its possession and

available for that purpose in accordance with current practice and any applicable agreement

governing the Bank Accounts.

19. The Debtors are authorized, but not directed, to pay prepetition amounts

outstanding as of the Petition Date, if any, owed to the financial institutions and other third

parties that directly or indirectly provide services to the Debtors in connection with the Cash

Management System as Bank Fees and other service charges for the maintenance of the Cash

Management System.

20. The Debtors are further authorized to issue postpetition checks, or to effect

postpetition fund transfer requests, in replacement of any checks or fund transfer requests that


9

are dishonored as a consequence of these chapter 11 cases with respect to any prepetition

amounts that are authorized to be paid pursuant to this Order.

21. Nothing contained in the Motion or this Order or any payment made

pursuant to the authority granted by this Order is intended to be or shall be construed as (i) an


appropriate party in interest’s rights to dispute any claim, (iii) a waiver of the Debtors’ or any

other party in interest’s rights under the Bankruptcy Code or any other applicable law, or (iv) an

approval or assumption of any agreement, contract, program, policy, or lease under section 365

of the Bankruptcy Code.

22. Notwithstanding anything to the contrary contained herein, any payment

to be made, or authorization contained hereunder, shall be subject to the same limitations and

restrictions as are provided for in any interim or final order (the “Cash Collateral Orders”)

entered pursuant to the Debtors’ Emergency Motion of Debtors Pursuant to 11 U.S.C. §§ 105,

361, 362, 363 and 507, Bankruptcy Rules 2002, 4001, 6003, 6004, and 9014 and Bankruptcy

Local Rule 4001-1, inter alia, (I) Authorizing Debtors’ Limited Use of Cash Collateral,

(II) Granting Adequate Protection to the Prepetition Secured Parties, (III) Modifying the

Automatic Stay, and (IV) Scheduling a Final Hearing. To the extent there is any conflict

between this Order and the Cash Collateral Orders, the terms of the Cash Collateral Orders shall

control.

23. The requirements of Bankruptcy Rule 6003(b) have been satisfied.

24. Notice of the Motion as provided herein shall be deemed good and

sufficient notice of such Motion and the requirements of Bankruptcy Rule 6004(a) are waived.


10

25. Notwithstanding the provisions of Bankruptcy Rule 6004(h), this Order

shall be immediately effective and enforceable upon its entry.

26. This Order is effective only from the date of entry through this Court’s

disposition of the Motion on a final basis; provided, that the Court’s ultimate disposition of the

Motion on a final basis shall not impair or otherwise affect any action taken pursuant to this

Order.

27. The Debtors are authorized to take all steps necessary or appropriate to

carry out this Order.

28. This Court shall retain jurisdiction to hear and determine all matters

arising from or related to the implementation, interpretation, or enforcement of this Order.

29. A final hearing to consider the relief requested in the Motion shall be held

on , ____ at ______ (Central Time) and any objections or

responses to the Motion shall be filed and served so as to be actually received on or prior to

, ____ at 4:00 p.m. (Central Time).

Dated: , 2017 Houston, Texas

UNITED STATES BANKRUPTCY JUDGE


Schedule 1

Bank Accounts


Bank Debtor Account Number (last four digits)

Account Name

Wells Fargo Bank, N.A.

Memorial Production Operating LLC

3030 MPO Operating Account



2164 MPO A/P Account



2179 MPO Royalty Account



0132 MPO Cash Collateral

Account Wells Fargo Bank,

N.A. Beta Operating Company,

LLC 1869 Beta Main Account


Beta Operating Company, LLC

0759 Beta A/P Account


San Pedro Bay Pipeline Company

4044 San Pedro Main Account



0767 San Pedro A/P Account


MEMP Services LLC 0902 MEMP Services Main


N.A. MEMP Services LLC 0910

MEMP Services Payroll Account


MEMP Services LLC 1926 MEMP Services A/P

Account


Exhibit B

Proposed Final Order



HOUSTON DIVISION

§ In re: § Chapter 11 § MEMORIAL PRODUCTION § Case No. 17-______ (___) PARTNERS LP, et al., § § (Jointly Administered) Debtors.1 § § Re: Docket No. ___

FINAL ORDER PURSUANT TO 11 U.S.C. §§ 105(a), 345(b), 363(b)(1), 363(c)(1),

AND 364(a) AND FED. R. BANKR. P. 6003 AND 6004 (I) AUTHORIZING DEBTORS TO (A) CONTINUE EXISTING CASH MANAGEMENT SYSTEM, (B) MAINTAIN BUSINESS FORMS AND EXISTING BANK ACCOUNTS, (C) CONTINUE INTERCOMPANY

ARRANGEMENTS, AND (D) CONTINUE USING CORPORATE PAYMENT CARDS; (II) EXTENDING TIME TO COMPLY WITH, OR SEEK WAIVER OF, THE REQUIREMENTS OF 11 U.S.C. § 345(b); (III) WAIVING

THE REQUIREMENTS OF RULE 7B OF THE PROCEDURES FOR COMPLEX CHAPTER 11 BANKRUPTCY CASES; AND (IV) GRANTING RELATED RELIEF

Upon the motion, dated January 16, 2017 (the “Motion”),2 of Memorial

Production Partners LP (“MEMP”) Inc. and its debtor affiliates, as debtors and debtors in

possession (collectively, the “Debtors”), for (i) interim and final authority to (a) continue their

existing cash management system; (b) continue using their existing Business Forms and Bank

Accounts; (c) continue their intercompany arrangements; and (d) continue using their Corporate


2 All capitalized terms, used but not otherwise defined herein, shall have the meanings ascribed to them in the Motion.


2

Payment Cards, each in the ordinary course and consistent with past practices; (ii) extension of

the time to comply with, or to seek a waiver of, the requirements of section 345(b) of the

Bankruptcy Code; (iii) a waiver of Rule 7B of the Complex Chapter 11 Guidelines; and

(iv) related relief, each as more fully set forth in the Motion; and upon consideration of the

Stillwell Declaration; and the Court having jurisdiction to consider the Motion and the relief

requested therein pursuant to 28 U.S.C. §§ 157 and 1334, and the Order of Reference to

Bankruptcy Judges, General Order 2012-6 (S.D. Tex. May 24, 2012) (Hinojosa, C.J.); and

consideration of the Motion and the requested relief being a core proceeding pursuant to 28

U.S.C. § 157(b); and venue being proper before this Court pursuant to 28 U.S.C. §§ 1408 and

1409; and due and proper notice of the Motion having been provided to the Notice Parties, and it

appearing that no other or further notice need be provided; and the Court having reviewed the

Motion; and the Court having held a hearing on the Motion on ____________________, 2017

and the Court having granted interim relief on the Motion on ____________________, 2017

(Docket No. ___); and the Court having held a final hearing on the Motion on

______________________; and all objections to the Motion having been withdrawn, resolved,

or overruled; and the Court having determined that the legal and factual bases set forth in the

Motion establish just cause for the relief granted herein; and it appearing that the relief requested

in the Motion is in the best interests of the Debtors and their respective estates and creditors; and

upon all of the proceedings had before the Court and after due deliberation and sufficient cause

appearing therefor,

IT IS HEREBY ORDERED THAT:

1. The Motion is granted.


3

2. Pursuant to sections 105(a) and 363(c) of the Bankruptcy Code, the

Debtors are authorized to continue to manage their cash pursuant to the Cash Management

System maintained by the Debtors before the Petition Date and to collect and disburse cash in

accordance with the Cash Management System, including intercompany funding to Debtor and

non-Debtor affiliates.

3. The Debtors and Wells Fargo or any other bank or financial institution

may, without further order of this Court, agree to and implement changes to the Cash

Management System and procedures in the ordinary course of business and consistent with past

practices.

4. Pursuant to section 105(a) of the Bankruptcy Code, Wells Fargo and other

banks and financial institutions are authorized to continue to honor transfers, as directed by the

Debtors, of funds among the Bank Accounts and to the Debtors and their non-Debtor affiliates.

5. The Debtors are authorized, in the ordinary course, to continue to honor

prepetition and postpetition intercompany obligations to subsidiaries and affiliates (Debtor and

non-Debtor) in accordance with their prepetition practices. Intercompany claims against a

Debtor by another Debtor or non-Debtor affiliate that arise postpetition as a result of an

intercompany transaction are granted administrative expense status.

6. The Debtors shall maintain accurate records of all transfers within the

Cash Management System so that all postpetition transfers and transactions shall be adequately

and promptly documented in, and readily ascertainable from, their books and records, to the

same extent maintained by the Debtors before the Petition Date. Upon the request of the

Prepetition Agent with reasonable advance notice, the Debtors shall permit the Prepetition Agent

to inspect their records with respect to such postpetition transfers and transactions.


4

7. The Debtors are authorized to: (i) designate, maintain, and continue to use

any or all of their existing Bank Accounts listed on Schedule 1 annexed hereto (which shall be

promptly amended to identify any Bank Accounts inadvertently omitted therefrom, with any

such amendments being served on the U.S. Trustee, the Prepetition Agent, and any statutory

committee appointed in these chapter 11 cases), in the names and with the account numbers

existing immediately before the Petition Date, (ii) deposit funds in and withdraw funds from

such accounts by all usual means, including, without limitation, checks, wire transfers,

automated clearinghouse transfers, and other debits, (iii) pay any Bank Fees or other service

charges associated with the Bank Accounts or the Corporate Payment Cards, whether arising

before or after the Petition Date, and (iv) treat their Bank Accounts for all purposes as debtors in

possession accounts.

8. Except as otherwise provided in this Order, Wells Fargo and other

applicable banks or other applicable financial institutions are authorized and directed to continue

to maintain, service, and administer the Bank Accounts without interruption and in the usual and

ordinary course, and to receive, process, honor, and pay all checks, drafts, wires, or other

transfers by the holders or makers thereof, as the case may be, to the extent that Debtors have

sufficient funds standing to their credit with such bank or financial institution; provided, that

nothing contained herein shall (i) require Wells Fargo or any other applicable bank or applicable

financial institution to honor any check, ACH transfer, draft wire, or other transfer unless the

account has good and collected funds at the time of the requested action or (ii) authorize Wells

Fargo or any other bank or financial institution to honor any check, ACH transfer, draft, wire, or

other transfer issued or dated before the Petition Date, except as otherwise provided herein or by

other order of this Court. Wells Fargo and any other banks or financial institutions are


5

authorized to rely upon and accept and honor all representations and instructions from the

Debtors as to which check, ACH transfer, draft, wire, or other transfer drawn or issued by the

Debtors before the Petition Date should be honored pursuant to an order of this Court, and such

financial institutions shall not have any liability to any party for (a) relying on this Final Order or

the representations or instructions by the Debtors as provided for herein or any other order of this

court or (b) honoring or not honoring any check, ACH transfer, draft, wire, or other transfer in a

good-faith belief that the Court has or has not authorized the honoring of such check, ACH

transfer, draft, wire, or other such transfer.

9. Wells Fargo and any other banks or financial institutions are authorized to

debit the Debtors’ accounts in the ordinary course of business without the need for further order

of this Court for: (i) all checks drawn on the Debtors’ accounts which are cashed or exchanged

for cashier’s checks by the payees thereof prior to the Petition Date; (ii) all checks or other items

deposited in one of the Debtors’ accounts prior to the Petition Date which have been dishonored

or returned unpaid for any reason, together with any fees and costs in connection therewith, to

the same extent the Debtors were responsible for such items prior to the Petition Date; and

(iii) all amounts outstanding as of the date hereof, if any, owed to Wells Fargo or any other bank

or financial institution as service charges for the maintenance of the Cash Management System,

including, without limitation, any Bank Fees or other service charges associated with the Bank

Accounts or the Corporate Payment Cards, whether arising before or after the Petition Date.

10. Those certain existing deposit agreements and Corporate Payment Card

agreements between the Debtors, on the one hand, and Wells Fargo or any other bank or

financial institution, on the other hand, shall continue to govern the postpetition cash

management relationship between such parties, and all of the provisions of such agreements,


6

including, without limitation, the termination and fee provisions, shall remain in full force and

effect.

11. The Debtors are authorized pursuant to 363(b) and 105(a) to continue

using their Corporate Payment Cards in the ordinary course and consistent with past practices,

and to pay all obligations (including prepetition obligations) related thereto; provided, however,

the Debtors’ use of the Corporate Credit Cards is subject to the terms expressed in paragraphs 12

and 13 below.

12. The Debtors are authorized to continue using the Corporate Credit Cards

in the ordinary course and consistent with past practices pursuant to the WellsOne Commercial

Card Agreement, dated on or around July 6, 2016 (as amended, restated, supplemented or

otherwise modified from time to time, the “Card Agreement”), between Wells Fargo (in such

capacity, the “Credit Card Provider”) and MPO subject to the terms and conditions thereof.

The Debtors’ obligations to the Credit Card Provider are secured by certain collateral (the

“Collateral”) in the MPO Cash Collateral Account pursuant to that certain Security Agreement:

Immediately Restricted Wells Fargo Bank, National Association Deposit Account, dated as of

January 13, 2017 (the “Security Agreement”), between the Credit Card Provider and MPO. In

accordance with the Security Agreement, the Credit Card Provider has and shall continue to have

a valid and perfected, non-avoidable first-priority lien on such Collateral and any proceeds

thereof. Such lien shall not be primed by any lien granted to any post-petition lender or other

person without the consent of the Credit Card Provider.

13. With respect to the Debtors’ use of Corporate Credit Cards, the Credit

Card Provider is authorized to make advances from time to time to MPO with a maximum

exposure at any time up to $150,000.00. The Debtors shall prepay all ACH transfers related to


7

the Corporate Credit Cards at least two (2) business days in advance of such transfer. The

Debtors are authorized and directed to pay all obligations, charges, and fees, including

prepetition obligations, charges, and fees, related to the Corporate Credit Cards. The Credit Card

Provider may rely on the representations of the Debtors with respect to its use of the Corporate

Credit Cards pursuant to the Card Agreement, and the Credit Card Provider shall not have any

liability to any party for relying on such representations by the Debtors as provided for herein.

14. The Debtors’ time to comply with section 345(b) of the Bankruptcy Code

is hereby extended for a period of 45 days from the date of this Order (the “Extension Period”);

provided, however, that such extension is without prejudice to the Debtors’ right to request a

further extension of the Extension Period or to seek a waiver of the section 345(b) of the

Bankruptcy Code in these cases.

15. The requirements of Rule 7(B) of the Complex Case Procedures are

hereby waived, and the Debtors are not required to establish separate accounts for cash collateral,

tax payments, or funds attributable to overriding royalties, working interest owners, and third

parties.

16. Nothing contained herein shall prevent the Debtors from opening any

additional deposit accounts, or closing any Bank Accounts, in the ordinary course, as they may

deem necessary and appropriate in consultation with the Prepetition Agent, and Wells Fargo and

other banks and financial institutions are authorized to honor the Debtors’ request to open or

close, as the case may be, Bank Accounts or additional bank accounts; provided, that any new

deposit account shall be with (i) a bank that is insured by the Federal Deposit Insurance

Corporation, organized under the laws of the United States, and designated as an Authorized

Depository under the UST Operating Guidelines or (ii) any other bank, as the Debtors may


8

determine, upon prior notice to the U.S. Trustee, the Prepetition Agent, and any statutory

committee appointed in these chapter 11 cases; provided, further, that all accounts opened by any

of the Debtors on or after the Petition Date at any bank shall, for purposes of this Order, be

deemed a Bank Account as if it had been listed on Schedule 1 hereto.

17. The Debtors are authorized to use their existing Business Forms and are

not required to (i) obtain new stock reflecting their status as debtors in possession, or (ii) print

“debtor in possession,” the Debtors’ chapter 11 case numbers, or other information on any of

their checks or wire transfers; provided, that the Debtors will use reasonable efforts to have

electronic checks include the legend referring to the Debtors as “Debtors in Possession” as soon

as practicable; provided, further, that if the Debtors generate new checks during the pendency of

these chapter 11 cases, such checks shall include a legend referring to the Debtors as “Debtors in

Possession.”

18. To the extent a bank or other financial institution in the ordinary course of

the Cash Management System incurs an overdraft or other event giving rise to an uncovered

debit, regardless of whether arising prepetition or postpetition, the financial institution shall be

authorized to cover the overdraft or debit from funds of the Debtors in its possession and

available for that purpose in accordance with current practice and any applicable agreement

governing the Bank Accounts.

19. The Debtors are authorized, but not directed, to pay prepetition amounts

outstanding as of the Petition Date, if any, owed to the financial institutions and other third

parties that directly or indirectly provide services to the Debtors in connection with the Cash

Management System as Bank Fees and other service charges for the maintenance of the Cash

Management System.


9

20. The Debtors are further authorized to issue postpetition checks, or to effect

postpetition fund transfer requests, in replacement of any checks or fund transfer requests that

are dishonored as a consequence of these chapter 11 cases with respect to any prepetition

amounts that are authorized to be paid pursuant to this Order.

21. Nothing contained in the Motion or this Order or any payment made

pursuant to the authority granted by this Order is intended to be or shall be construed as (i) an


appropriate party in interest’s rights to dispute any claim, (iii) a waiver of the Debtors’ or any

other party in interest’s rights under the Bankruptcy Code or any other applicable law, or (iv) an

approval or assumption of any agreement, contract, program, policy, or lease under section 365

of the Bankruptcy Code.

22. Notwithstanding anything to the contrary contained herein, any payment

to be made, or authorization contained hereunder, shall be subject to the same limitations and

restrictions as are provided for in any interim or final order (the “Cash Collateral Orders”)

entered pursuant to the Debtors’ Emergency Motion of Debtors Pursuant to 11 U.S.C. §§ 105,

361, 362, 363 and 507, Bankruptcy Rules 2002, 4001, 6003, 6004, and 9014 and Bankruptcy

Local Rule 4001-1, inter alia, (I) Authorizing Debtors’ Limited Use of Cash Collateral,

(II) Granting Adequate Protection to the Prepetition Secured Parties, (III) Modifying the

Automatic Stay, and (IV) Scheduling a Final Hearing. To the extent there is any conflict

between this Order and the Cash Collateral Orders, the terms of the Cash Collateral Orders shall

control.

23. The requirements of Bankruptcy Rule 6003(b) have been satisfied.


10

24. Notice of the Motion as provided herein shall be deemed good and

sufficient notice of such Motion and the requirements of Bankruptcy Rule 6004(a) are waived.

25. Notwithstanding the provisions of Bankruptcy Rule 6004(h), this Order

shall be immediately effective and enforceable upon its entry.

26. The Debtors are authorized to take all steps necessary or appropriate to

carry out this Order.

27. This Court shall retain jurisdiction to hear and determine all matters

arising from or related to the implementation, interpretation, or enforcement of this Order.

Dated: __________________, 2017 Houston, Texas

UNITED STATES BANKRUPTCY JUDGE


Schedule 1

Bank Accounts


Bank Debtor Account Number (last four digits)

Account Name



3030 MPO Operating Account



2164 MPO A/P Account



2179 MPO Royalty Account



0132 MPO Cash Collateral


N.A. Beta Operating Company,

LLC 1869 Beta Main Account



0759 Beta A/P Account



4044 San Pedro Main Account



0767 San Pedro A/P Account


MEMP Services LLC 0902 MEMP Services Main


N.A. MEMP Services LLC 0910



MEMP Services LLC 1926 MEMP Services A/P

Account


Exhibit C

Cash Management Chart


Memorial Production Partners

Cash Management System

1

1All accounts except the MPO Operating Account and MPO Cash Collateral Account are ZBA accounts

Source Number

MPO Operating Account1

Wells Fargo Bank, N.A.XX3030

(Memorial Production Operating LLC)

MPO A/P AccountWells Fargo Bank, N.A.

XX2164(Memorial Production Operating

LLC)

MPO Royalty AccountWells Fargo Bank, N.A.

XX2179(Memorial Production Operating

LLC)

Beta Main AccountWells Fargo Bank, N.A.

XX1869(Beta Operating Company, LLC)

Beta A/P Account Wells Fargo Bank, N.A.

XX0759(Beta Operating Company, LLC)

San Pedro Main AccountWells Fargo Bank, N.A.

XX4044(San Pedro Bay Pipeline

Company)

San Pedro A/P AccountWells Fargo Bank, N.A.

XX0767(San Pedro Bay Pipeline

Company)

MEMP Services Main Account


(MEMP Services LLC)



(MEMP Services LLC)

MEMP Services A/P AccountWells Fargo Bank, N.A.

XX1926(MEMP Services LLC)

Overview of Debtors' Cash Management System

Oil and Gas Customer Receipts

(ACH/Wire)

JIB Receipts,Hedges, Misc.

Receipts(ACH/Check/Wire)

Oil and Gas Customer Receipts

(Wire)

MEMP Services LLC




P-Cards, Hedges, Bank Fees, Taxes, Vendors by

Wire, Misc.(Debit/Wire)

Royalty and Working Interest Payments

(ACH/Check)

Debt Service -RBL, Notes(Debit/Wire)

JIB Payments(ACH/Check)

Trade Vendors, Land Payments, Taxes, Misc

(ACH/Check/V-Card)

Trade Vendors, Taxes, Misc.

(ACH/Check/V-Card)

Employee Expense Reimbursements, Employee Benefits

(ACH/Check)

Payroll and Benefits(Debit/Reverse Wire)

Government Fees / Royalties, Misc.

(Debit/Wire)

Trade Vendors, Taxes, Misc.

(ACH/Check/V-Card)

Misc. Opex(Wire)

Certain Payroll(Wire)

KEY

Cash inflow into bank account Cash outflow from bank account Cash movement to & from bank account

MPO Cash Collateral Account

Wells Fargo Bank, N.A.[XX0132]

(Memorial Production Operating LLC)

Cash Collateral Account for

Corporate Cards(Wire)


Documents

IN THE UNITED STATES BANKRUPTCY COURT FOR THE … · Of those eleven Bank Accounts, one Bank Account serves as the Debtors’ main operating account; one Bank Account is a restricted