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Editor’s Note: A previous version of this story incorrectly said Riverstone had agreed to receive interest in kind on Fieldwood’s second lien. Instead, it agreed to defer interest payment. The story below has been amended to reflect this.

Fieldwood Energy, the Houston-based E&P that is working with Evercore and Weil Gotshal to address its debt burden, has deferred interest on the second-lien senior secured term loan holdings owned by equity sponsor Riverstone, according to several sources familiar with the matter. Riverstone, which owns approximately half of the $1.6 billion second-lien term loan, elected to receive deferred interest while payments to other holders of the debt tranche are still made in cash, the people said.

The $1.6 billion second-lien term loan is due Sept. 30, 2020 and pays L+ 7.125% in interest. Fieldwood’s debt also consists of a $755 million first lien term loan due Sept. 28, 2018, a $387 million reserve-based term loan due Aug. 31, 2020, and a $517 million first lien last-out loan due Sept. 30, 2020, according to sources and Moody’s reports.

The second-lien traded at 42 on Friday morning, and closed at 45.50 after Riverstone made its decision to accept in-kind interest, according to one of the sources. A number of advisors are gearing up to pitch to creditors.

A spokesman for Fieldwood Energy declined to comment. Riverstone did not respond to a request for comment by press time.

While deferring the interest may buy the company time, it is at best a medium-term solution that does not fundamentally alter Fieldwood’s liquidity profile, the people said. The company this month said on a conference call that its cash totaled $23 million at the end of the second quarter and that it bolstered liquidity by $30 million in July after monetizing hedges that it put in place for the second half of the year.

Fieldwood, which describes itself on its website as the largest operator on the continental shelf of the Gulf of Mexico, was founded in 2012 through a $600 million commitment from Riverstone and a $25 million commitment from Fieldwood management. In the summer of 2013, the company acquired Apache Corp.’s Gulf of Mexico shelf business for $3.75 billion, and in December of that year, it acquired Sandridge’s Gulf of Mexico and Gulf Coast business units for $750 million.

The company completed a debt exchange in 2016 after the collapse in oil prices which began in mid-2014. As part of the exchange, the company traded $517.5 million of its second lien term loans for the new $517.5 million first lien last-out debt. Riverstone purchased more than $640 million of the second-lien term loan “at a significant discount,” according to Moody’s, which said it regarded the transactions as a “distressed exchange.” The company paid down its outstanding revolver borrowings with a $388 million reserve-based term loan due Aug. 31, 2020; the revolver remains outstanding to support letters of credit, according to sources.