Jul. 7--Three affiliated Oklahoma City-based energy companies have agreed to combine into a single publicly traded corporation.

Quest Resource Corp., Quest Energy Partners LP and Quest Midstream Partners LP have entered into a definitive agreement to form a yet-to-be-named company that would own all three entities.

The deal is subject to approval from shareholders and lenders, and the acquisition of a credit facility by the proposed company. The simplified structure would focus on cutting costs, and is expected to produce savings in its first year, Quest said.

Quest Chief Executive David C. Lawler said the execution of a definitive merger agreement represented progress.

"While much work must still be completed, we believe the proposed recombination makes the Quest entities more competitive in today's market environment by allowing us to further reduce costs, increase operational efficiency, and simplify our organizational structure," Lawler said in a statement.

Future in doubt Quest Resource last month told regulators the company may be forced into bankruptcy and estimated the company would run through its cash by Aug. 31. The company's independent auditor expressed "serious doubt" over Quest's ability to continue as a going concern.

Quest Resources depends on payments from Quest Energy Partners and Quest Midstream Partners, but those entities suspended distributions last year, the company said.

Quest Resources "does not expect to receive any distributions from Quest Energy or Quest Midstream in 2009 and is unable to estimate at this time when such distributions may be resumed," the company said.

The Quest companies have been dealing with falling energy prices combined with financial improprieties -- some alleged and some admitted -- by former executives.

The board of the proposed company would comprise nine people, including three current independent directors from the general partner of Quest Energy, three existing directors of the general partner of Quest Midstream, two current independent directors from Quest Resource, and Lawler, who is serving as chief executive for all three Quest companies.

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