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September 2019

Vol. 24, No.37 Week of September 22, 2019

Furie gets debtor in possession funding; state files bonding notice

Steve Sutherlin

Petroleum News

Furie Operating Alaska LLC got some breathing room Sept. 17 as U.S. Bankruptcy Judge Laurie Selber Silverstein ruled to release the company’s $15 million post-petition Chapter 11 financing, according to Law360.

Selber Silverstein said she continues to have concerns - as do some of Furie’s creditors - about $5 million of the debtor-in-possession funds which the company plans to use to pay prepetition lender fees. No funds will be available to pay creditors.

State files bonding notice

Meanwhile, on Sept. 11, the state of Alaska filed notice to prospective bidders of certain bonding and assignment requirements that any successful purchaser of debtors’ assets must satisfy.

The Department of Natural Resources, Division of Oil and Gas, and the Alaska Oil and Gas Conservation Commission must approve any sale of the debtors’ leases and operation.

Any potential buyer of the debtors’ leases must qualify with DNR by showing that it is qualified to do business in Alaska, the state said, while a new operator of the debtors’ operations must supply a $500,000 statewide bond.

In addition, a potential new lessee must post an additional bond for each lease assignment, to be determined on a lease-by-lease basis, which factors in the estimated amount of the dismantling, removal and restoration obligation; the amount of recoverable oil and gas; and other considerations.

The total amount of the DR&R obligation will be driven by a number of factors, including but not limited to the cost of removing the existing drilling platform at the end of the Kitchen Lights Unit’s life.

“Based upon DNR’s experience, but subject to input from any new purchaser, that total cost could be in the $40 to $60 million range,” the state said.

“AOGCC must approve any change of unit operator,” the state said. Among other things, AOGCC requires bonding for plugging and abandonment of any wells located on state leases being acquired. Purchasers must secure $2.8 million in bonding for the seven wells located within the KLU.

Further, the state said bidders interested in bidding on the debtors’ assets must factor in two major aspects of such regulation: (1) bonding requirements; and (2) approval requirements.

“Interested persons should also consider the time necessary for the State to process the necessary applications,” the state said.

The state cautioned that the notice “is an overview only, and prospective bidders should independently investigate federal, state, and local regulations relating to the assets and operations of Debtors’ business.”

- STEVE SUTHERLIN





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