CIRI files opposition to Buccaneer sale proposal
Cook Inlet Region Inc. objected on multiple levels to Buccaneer Energy’s proposed bid and sale terms for the bankrupt oil and gas independent’s assets.
The Southcentral Alaska Native regional corporation’s Oct. 13 filing in U.S. Bankruptcy Court for the Southern District of Texas claims that Buccaneer’s Oct. 7 motion, which requests its assets be sold together under one bid with a “naked” auction, will not draw fair market value.
Buccaneer’s only producing asset is the small Kenai Loop natural gas field it operates in the City of Kenai. CIRI owns land adjacent to the Kenai Loop pad parcel and is seeking substantial royalties from Kenai Loop production, which it says has drained gas from CIRI’s portion of the reservoir. That fight is ongoing in the Alaska Oil and Gas Conservation Commission.
Australia-based Buccaneer filed for Chapter 11 bankruptcy in the Houston court May 31 after failed investor deals and empty Cook Inlet exploration work left the company and its subsidiaries with less than $50,000 in cash and between $50 million and $100 million in liabilities.
According to a list of unsecured creditors, the State of Alaska and nine Alaska-based companies were owed a total of more than $2.1 million when Buccaneer filed for bankruptcy.
CIRI also objected to the suggested handling of what Buccaneer referred to as “suspended proceeds.” The bid and sale proposal would hand off responsibility to the winning bidder of an escrow account to hold Kenai Loop production funds while the royalty dispute is pending. First ordered by the AOGCC in May, Buccaneer finally set up the account Oct. 2.
If Buccaneer’s sale proposal is granted by Judge David Jones, potential bidders would have to deliver their bids by noon Alaska time on Oct. 24 to a trustee of the court and the impacted parties. Bids would have to be for “substantially all” of Buccaneer’s assets, unless other terms were agreed to by Buccaneer, the company’s updated Oct. 15 motion states.
Buccaneer filed for a 30-day extension to file their bankruptcy plan Sept. 26, pushing the deadline out to Oct. 28.
Bidders would be additionally required to submit a “good faith deposit” of $3 million and a letter agreeing that Buccaneer could keep the winning bidder’s deposit if a deal fell through after the auction, which would be held Oct. 27 at the Houston office of the law firm Fulbright and Jaworski LLP beginning at 6 a.m. Alaska time.
Tennessee-based Miller Energy Resources Inc., the parent to Cook Inlet Energy, has expressed its intent to bid on Buccaneer’s assets, as has the finance group AIX Energy LLC, which purchased debt from a major Buccaneer creditor earlier this year.
Based on statements from Miller and AIX, bids could be in the $50 million range.
Parties objecting to a winning bid would have until late Oct. 29 to file a protest to the bid, a period CIRI argues should be at least a week given the complexity of the case.
Elwood Brehmer can be reached at [email protected].