BOEM accepts Stone’s financial assurances plan

Stone Energy, a Gulf of Mexico focused oil and gas firm, in March received a notice from the Bureau of Ocean Energy Management (“BOEM”), seeking financial assurances related to its abandonment obligations in the Gulf of Mexico. 

According to a statement by Stone issued on Thursday, May 19, the matter has now been resolved.

BOEM requires all operators in federal waters to provide financial assurances sufficient to cover the estimated cost of plugging and abandoning wells and decommissioning offshore facilities.

Historically, Stone Energy recently said, the company has been able to obtain an exemption from most bonding obligations based on financial net worth.

However, on March 21, 2016, Stone received notice letters from BOEM stating that BOEM had determined that Stone no longer qualifies for a supplemental bonding waiver under the financial criteria specified in BOEM’s current guidance to lessees.

BOEM’s notice letters indicated the amount of Stone’s supplemental bonding needs was approximately $565 million. Stone then in March said it was in discussions with BOEM to reduce the amount of the supplemental bonding or other forms of financial assurance that the agency may require and the timing of when such bonds or financial assurances may need to be provided.

On Thursday, Stone said it had met with and proposed a tailored plan to BOEM for financial assurances relating to its abandonment obligations, which provides for posting some incremental financial assurances in favor of BOEM. Currently, Stone says it has an aggregate of approximately $230 million posted in surety bonds in favor of BOEM, third party bonds and letters of credit, all relating to its offshore abandonment obligations.

Furthermore, the oil and gas firm then said it, on May 13, 2016, received notice letters from BOEM rescinding its demand for supplemental bonding with the understanding that Stone will continue to make progress with BOEM in finalizing and implementing the company’s long-term tailored plan.

Bankruptcy an option?

While partly resolving the issue with BOEM, Stone is in the process of analyzing various alternatives to address its liquidity and capital structure. The company this week said that those alternatives include strategic and refinancing alternatives through a private restructuring, asset sales and a prepackaged or prearranged bankruptcy filing.

The company this week decided to delay a $29 million interest payment obligation due on May 16, 2016, to allow itself additional time to assess its restructuring alternatives. If the company does not make its interest payment by June 14, 2016, an event of default would occur.

Additionally, Stone Energy said it expects to receive formal notice from the New York Stock Exchange (the “NYSE”) that it is not in compliance with the NYSE continued listing standards, as its average global market capitalization over a consecutive 30 trading-day period is less than $50 million, and at the same time stockholders’ equity is less than $50 million.

 

Offshore Energy Today Staff

 

Share this article

Follow Offshore Energy Today

Events>

<< Oct 2019 >>
MTWTFSS
30 1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31 1 2 3

Executive Oil Conference & Expo 2019

Executive Oil Conference and Exhibition is a unique opportunity to meet with all of the region’s…

read more >

Oil & Gas Vietnam 2019

Oil & Gas Vietnam (OGAV) 2019 is the only specialized oil & gas event in Vietnam that brings together an international congregation of both upstream and downstream oil and gas companies and also its supporting industries gathered in the heart of Vietnam’s oil and gas industry in Vung Tau, to showcase the latest developments in the oil and gas industry.

read more >

Jobs>

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply