U.S. government objects to Black Elk Offshore’s disclosure statement

By Sheri Kasprzak

New York, April 18 – The United States government, via the Department of the Interior, entered an objection Monday against Black Elk Offshore Operations, LLC’s disclosure statement in the U.S. Bankruptcy Court for the Southern District of Texas Houston Division.

The Chapter 11 plan, as currently proposed, cannot be confirmed because it doesn’t provide for the payment of U.S. administrative expense claims in cash on the effective date of the plan, and the U.S. has not agreed to a different treatment of its claims, said the objection.

The disclosure statement, according to the objection, does not provide for expenses incurred to comply with federal environmental or safety laws related to the decommissioning of oil wells.

“To get around this insurmountable section 1129(a)(9) hurdle to confirmation, the disclosure statement makes erroneous or unsupported assertions that the P&A plan will reduce substantially all of the debtor’s decommissioning obligations on its operating properties to zero and the debtor does not have the primary obligation to P&A many of the non-operating properties in which it has either a record title interest or an operating rights interest,” said the objection.

These assertions, the objection says, are without merit because about $15.8 million of decommissioning obligations on excluded operated properties in which W&T Offshore Inc., itself an entity widely reported to be financially unstable and quite possibly on the brink of insolvency, is the predecessor in interest.

“Unless and until W&T is willing to commit escrow funds or any private bonding reserved for P&A towards decommissioning this subset of excluded operated properties prior to confirmation, it is unclear what decommissioning, if any, would ever get completed on these excluded operated properties, particularly if W&T were to file its own bankruptcy petition at some point in the near future,” said the objection.

Houston-based Black Elk is an oil and gas company that filed for bankruptcy on Sept. 15, 2015 under Chapter 11 case number 15-34287.

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