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Vol. 24, No.49 Week of December 08, 2019
Providing coverage of Alaska and northern Canada's oil and gas industry

Furie extends Ch 11 bid deadline; inlet asset auction in progress

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Steve Sutherlin

Petroleum News

The deadline to submit bids on the assets of Furie Operating Alaska LLC was extended through and including Dec. 4 at 4 p.m. Eastern Time.

The extended bid deadline notice was filed Dec. 2 by the counsel to the debtors and debtors in possession.

The notice modifies the Sept. 26 court order approving bidding procedures, which establish key dates and times related to the sale auction of proposed sale of substantially all of the debtors’ assets. The assets are being sold as part of a voluntary petition by Furie and its related debtors for relief under Chapter 11 of Title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware filed on Aug. 9.

The debtors listed about $450 million in debt against assets it listed at an estimated value of less than $50 million.

The assets primarily consist of the Furie’s Cook Inlet Kitchen Lights unit offshore the town of Nikiski on Alaska’s Kenai Peninsula, and natural gas production facilities including an offshore production platform and pipelines.

Mounting debt; multiple setbacks

The company made a large natural gas find in 2011 under the name Escopeta Oil, under the leadership of then-President Danny Davis.

Furie later experienced massive cost overruns under the leadership of COO Tom Hord, on an aborted attempt to install its gas production platform in 2014, followed by a redeployment and successful installation in 2015.

Debt ballooned, and in 2018, lender Energy Capital Partners Mezzanine Opportunities Fund A LP scheduled an April 13 foreclosure sale, which was canceled by ECP when a new agreement was presumably reached with the owners.

In March 2018, Ankura Consulting Group LLC was retained to assist Furie with interim management, and Scott Pinsonnault, a senior managing director at Ankura, was installed as interim COO of Furie.

In January 2019, hydrate plugs at Furie’s onshore processing facility and in the 15-mile subsea pipeline from the offshore production platform slowed natural gas delivery and put Furie’s contract with utility Enstar Natural Gas in jeopardy. Gas output fell from 739,023 thousand cubic feet to 1,886 mcf in February. Furie claimed a Force Majeure event, citing climate conditions.

Enstar since has reached a new gas sales agreement with Furie to accommodate Furie’s lower anticipated gas deliveries, but it notified the Regulatory Commission of Alaska, “Enstar continues to investigate the validity of the Force Majeure event and will continue to notify the RCA of any new material developments.”

Uncertainty with Alaska state tax credit reimbursements and years of liquidity issues exacerbated the company’s woes, according to the Ch. 11 first-day declaration of Pinsonnault.

Ankura and Pinsonnault continue to provide interim management of Furie during the bankruptcy proceedings.

- STEVE SUTHERLIN



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