An Alaskan bid for a struggling gas producer in Cook Inlet appears to be back following revisions to a state-guaranteed loan for the purchase.
On April 15, the board of directors of the Alaska Industrial Development and Export Authority approved technical changes to a March 4 resolution authorizing a loan of up to $ 7.5 million to Hex LLC, a company formed in late last year by longtime Alaskan oil and gas industry actor John Hendrix.
Hendrix, via Hex, submitted the winning bid of $ 15 million in a bankruptcy auction in December for Furie Operating Alaska, a small Texas-based natural gas producer that operates the Kitchen Lights unit and has contracts to provide a handful of Southcentral utilities.
Originally from Homer, Hendrix was Managing Director of Operations at Apache Corp. in Cook Inlet before becoming an oil and gas policy advisor to former Governor Bill Walker in 2016.
But the February court filings by Hex in the ongoing Fury Chapter 11 bankruptcy case claimed the auction was being advertised as a sale of assets but conducted as a sale of shares to keep Fury in control of its business. Inlet operations and eligible to receive overdue refundable tax credit payments from the state. . In its bankruptcy filing, Furie claimed $ 105 million in unpaid credits owed by the state.
Uncertainties stemming from a royalty claim filed by three minority owners in state leases that Furie operates would have collectively bypassed them, estimated at $ 50.7 million, also prevented Hex from securing funding for the sale, wrote Hex lawyer David Bundy at the time.
Lawyers for Furie and its major lenders retorted in separate court documents that Hex did not negotiate “in good faith” during the process, an allegation Bundy disputes.
With Hex unable to finance the purchase, one of New York-based Furie’s main lenders, Melody Capital Partners LP, attempted a foreclosure acquisition through a company he formed with GFR Holdings. Dallas LP, Kachemak Exploration LLC.
Melody Capital Partners was one of several lenders who collectively loaned Furie around $ 244.5 million, according to court documents.
However, Hendrix told AIDEA’s board on April 15 that he had recently signed an agreement to acquire Furie and that his company is now heading for a June 30 closing date. An omnibus court hearing is scheduled for May 8.
Hendrix and others involved in the case declined to discuss details of the ongoing proceedings, but he told AIDEA executives he hoped to increase state employment within Furie.
Sources said the global recession that accompanied the COVID-19 pandemic and caused significant downturns in financial and energy markets largely scuttled the Kachemak exploration proposal.
Hendrix said Furie worked with contractors based in Alaska, but the company’s workforce is mostly made up of 48 inferior workers.
According to a memorandum outlining the $ 7.5 million loan, the purchase of Hex would initially provide 15 new resident jobs on the Kenai Peninsula and support another 300 indirect jobs.
“We see a great opportunity to – it’s called studying rocks and getting back to base management,” Hendrix told the AIDEA board of directors, adding that he hopes to seek further drilling opportunities for oil and gas.
Fury officials said in 2017 that they plan to develop oil prospects in the Kitchen Lights gas field, but those plans were largely scuttled due to the state’s delay in repaying millions of dollars in credits. oil and gas tax that the company earned for its previous work, according to documents filed by the company with the National Oil and Gas Division.
The company filed for Chapter 11 bankruptcy protection on August 9 in federal bankruptcy court for the District of Delaware. According to the company’s bankruptcy petition, Furie owed lenders about $ 440 million when she filed for Chapter 11 protection and also owed about $ 105 million in refundable tax credits from the state of l ‘Alaska.
The company installed the Julius R platform in the kitchen lighting arena in 2015, which at the time was the first new production platform built by Inlet since the 1980s.
Fury officials estimated the value of the company’s assets to be between $ 10 million and $ 50 million when they initially filed for bankruptcy.
The financial challenges were almost continuous for the company, which achieved net gas sales of $ 25.4 million and absorbed a net loss of $ 58.5 million in 2017, according to bankruptcy filings. The situation worsened in 2018 when the company sold $ 42.8 million in natural gas but suffered a loss of almost $ 152 million.
Furie lost $ 21.4 million in the first quarter of 2019, when a freeze in a gas production pipeline prevented the company from supplying gas to HEA and Enstar for more than a month. Once gas deliveries resumed, Furie was only able to supply Enstar with quantities below the contract for several months as well.
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