|
Tanker company petitions for bankruptcy Overseas Shipholding Group says operations to continue normally; company has heavy involvement in crude oil transport in Alaska By Wesley Loy For Petroleum News
A New York City-based shipping company heavily involved in oil tanker operations in Alaska is going through a Chapter 11 bankruptcy reorganization.
Overseas Shipholding Group Inc. says it will “continue to serve customers without interruption” while it reorganizes its debt.
The company, along with numerous operating subsidiaries, on Nov. 14 filed voluntary Chapter 11 petitions in U.S. Bankruptcy Court in Delaware.
“The last few years have been difficult for everyone in our industry, but OSG has continued to provide safe, incident-free and reliable shipping services for our global client base,” the company’s chief executive, Morten Arntzen, said in a press release. “Our Jones Act fleet, in particular, has performed very well the last 18 months and has secured a number of notable contract extensions.”
Arntzen added: “We will use the Chapter 11 process to definitively resolve our financial issues. An orderly restructuring in Chapter 11 will provide stability both to OSG and to the entire shipping industry. We expect to emerge from our Chapter 11 reorganization with a solid financial base and clear path to future success.”
Major Alaska presence OSG is one of the largest publicly traded tanker companies in the world. It says it’s the largest mover of crude oil in and around U.S. waters, and claims to have the nation’s “largest blue water fleet.”
The Jones Act, referred to in OSG’s press release, governs shipping between U.S. ports. It forbids the use of foreign-flagged ships for moving cargo domestically.
OSG has a deep involvement with oil tankering in Alaska.
In the state’s junior oil province, Cook Inlet, the company operates tankers on behalf of Tesoro, which has a refinery at Nikiski on the Kenai Peninsula.
The company operates relatively new, double-hull tankers including the Overseas Nikiski, Overseas Boston and Overseas Martinez.
Limited liability companies for these individual ships were among the OSG subsidiaries filing bankruptcy petitions, according to documents on a website dedicated to the case. The address is www.kccllc.net/osg.
OSG also owns a 37.5 percent stake in Alaska Tanker Co., the Beaverton, Ore., company that moves Alaska North Slope crude for BP. Other owners in Alaska Tanker include BP and Keystone Shipping Co.
‘Business as usual’ An OSG vice president, Eric Smith, told the Cook Inlet Regional Citizens Advisory Council during a Dec. 7 board meeting that operations wouldn’t be interrupted and that it would be “business as usual.”
The council is a congressionally mandated organization that watches over industry activity in the Cook Inlet oil and gas basin.
In the company’s Nov. 14 press release, OSG’s chief executive also discounted chances for disruption through the bankruptcy proceedings.
“During the reorganization, we have more than enough cash to support our operations, and we expect it to be business as usual for OSG’s customers, employees, partners and suppliers,” Arntzen said.
OSG’s stock has taken a steep tumble, falling from nearly $87 a share in mid-2008 to less than a dollar in recent days.
In October 2012, the company informed investors that its financial statements for the previous three years “should not be relied upon.” The company said it was “reviewing a tax issue arising from the fact that the company is domiciled in the United States and has substantial international operations, and relating to the interpretation of certain provisions contained in the company’s loan agreements.”
The company recently has been hit with investor lawsuits.
| 