Buccaneer bankruptcy leaves businesses unpaid

  • By Elwood Brehmer
  • Wednesday, September 17, 2014 1:22pm
  • NewsBusiness

Buccaneer Energy Ltd. and its family of subsidiaries filed for bankruptcy in May, leaving millions worth of unpaid bills in Alaska.
The Australia-based independent’s debt in the state is more than $2.1 million, according to a list of Buccaneer’s 30 largest unsecured creditors filed with the U.S. Bankruptcy Court for the Southern District of Texas, located in Houston.
The Alaska Department of Revenue is listed as Buccaneer’s ninth-largest creditor and the second-largest in the state, with a bill of $605,116.
Department of Natural Resources spokeswoman Elizabeth Bluemink said the money is actually owed to DNR for a combination of Cook Inlet oil and gas lease payments and production royalty payments. Once paid it would almost immediately be transferred to the treasury, and subsequently the Revenue Department.
Overall, Buccaneer owes about $33 million to its 30 largest creditors.
One of the businesses it owes is Mayflower Remote Services, a catering and housekeeping company in Kenai, which has seen its work dry up since Buccaneer pulled out of Alaska this spring.
Mayflower was one of the first companies to contract with Buccaneer when it began exploring Cook Inlet late in 2012, owner Edgar Duero said.
“I’m just a small business owner. The bankruptcy has really devastated my company,” Duero said. “They owe me $96,000 and that’s a lot. I’m just trying to get legally what I can.”
Buccaneer owes Duero $96,800 to be exact. He understands that some other businesses are owed many times more, but Mayflower was under contract exclusively with Buccaneer, he said, meaning he has had to lay off all of his employees.
“The life of my business is pretty much gone,” he said.
Duero and his 16 employees fed drilling crews on Buccaneer’s Endeavor jack-up rig and onshore West Eagle from late 2012 through mid-February of this year, when Buccaneer’s tenuous financial situation began to catch up with it.
The nearly $100,000 bill is for about 10 weeks of work last winter, ending when Buccaneer shut operations down, according to Duero.
Any money he ends up seeing from Buccaneer will not be pocketed.
Duero said he owes $30,000 for food consumed on the Endeavor and at the West Eagle site east of Homer. Additionally, he owes about another $30,000 in federal taxes, which he said he doesn’t know how he’ll pay at this point.
Duero used a personal loan to pay his now laid off employees.
“Even though I got burned I cannot burn my people,” he said.
When operational, Buccaneer was almost always late with payments by about a month, Duero said, but the money eventually came through.
Working with Buccaneer was supposed to be a way to grow Mayflower Remote Services. He said he was optimistic when the state — through the Alaska Industrial Development and Export Authority — partnered with Buccaneer to bring the offshore jack-up rig to Cook Inlet.
“In the beginning I thought I could trust them because I heard the state of Alaska was part of this Endeavor rig and that was encouragement for a little guy,” Duero said.
Following the bankruptcy proceedings in Texas has been difficult and making sense of the stacks of court filings he gets from the creditor committee, which sends updates several times a week, has been equally as challenging for Duero.
“Of all the paperwork in my office I have more from the bankruptcy than my own paperwork,” he said.
“All of this wording you have to be an attorney to understand.”
He has been told more should be known by the end of the month, and payments could come by the end of the year, he said. However, being an unsecured creditor he likely won’t get everything he is due, Duero said.
“They’re not going to get you 100 percent; they’ll probably get you like 30 cents on the dollar,” he remarked.
Until then, Duero and his one remaining employee are operating Mayflower Catering in Anchorage.
City of Kenai Manager Rick Koch said the city had an amicable working relationship with Buccaneer while the company was in town.
“We never had any issues with them, but we never had much money in play either,” he said.
Buccaneer has kept current on its lease payments for three Kenai Loop wells located in the city through the bankruptcy, which total about $25,000 per year, according to Koch.
The other parties looking for payments related to the Kenai Loop production, namely Cook Inlet Region Inc., which claims it is owed gas royalties, will likely resume their case in Alaska Oil and Gas Conservation Commission hearings later this year. That case has been on hold while Buccaneer attempts to resolve its other known debts in bankruptcy court.
Koch added that Buccaneer adhered to its permits and followed protocol when doing seismic work on city property.
Koch said three or four local businesses testified at public meetings about work with Buccaneer that the city should’ve ended its relationship with the company based on the fact that they were not paid on time. Several peninsula companies ultimately demanded up-front payments from Buccaneer, he said.
Back in the South Texas court, Buccaneer filed to have five office leases and IT contracts vacated Sept. 9. Buccaneer’s attorneys filed for immediate relief from a $6,118 per month office lease in Anchorage that is set to expire Aug. 31, 2015.
In Nikiski, the company wants to vacate a $7,815 per month lease for 6,000 square feet of warehouse space that was used to house spare parts and equipment for the Endeavor.
Buccaneer no longer operates the Endeavor so it has no use for the warehouse and the money could be better allocated somewhere else, its attorneys reasoned in the court motion. Having paid through July, the lease would be retroactively rejected effective July 31.
According to Buccaneer the property owner holds a $7,800 security deposit and Buccaneer has vacated both the Anchorage and Nikiski properties.
A hearing regarding the lease motion is scheduled for Sept. 23, at noon, Alaska Standard Time.
Elwood Brehmer is a reporter for the Alaska Journal of Commerce. He can be reached at elwood.brehmer@alaskajournal.com.

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