Case Document 596 Filed in TXSB on 06/16/17 Page 1 of 4

Transcription

1 Case Document 596 Filed in TXSB on 06/16/17 Page 1 of 4 IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: NORTHSTAR OFFSHORE GROUP, LLC, Debtor. Chapter 11 Case No Jointly Administered MCMORAN OIL & GAS, LLC S OBJECTION TO DEBTOR S NOTICE OF (I) REQUEST FOR AUTHORITY TO ASSUME AND ASSIGN CERTAIN EXECUTORY CONTRACTS AND UNEXPIRED LEASES, AND (II) PROPOSED CURE AMOUNTS McMoRan Oil & Gas, LLC ( McMoRan ) files this Objection to Debtor s Notice of (I) Request for Authority to Assume and Assign Certain Executory Contracts and Unexpired Leases, and (II) Proposed Cure Amounts ( Cure Notice ) (D.I. 544) 1 and states as follows: INTRODUCTION 1. Northstar operates High Island A571, a property in which McMoRan owns a significant working interest. As operator and in violation of the Offshore Operating Agreement dated February 13, 1974 ( Operating Agreement ), Northstar allowed liens in excess of $1.4 million to accumulate against High Island A571, which Northstar has failed to cure. Accordingly and based upon Northstar s continuing default, McMoRan withheld joint interest billing payments. In response, Northstar began netting McMoRan s share of production despite the lack of a contractual right to do so. While McMoRan is in discussions regarding resolution of these issues, McMoRan objects to the proposed cure amount because it fails to address these issues with its zero cure estimate on three ill-defined contracts. 2. On May 26, 2017, Northstar filed the Cure Notice listing three Operating 1 Northstar filed a First Supplemental Cure Notice late on June 15, 2017, the day before the objection deadline to the original Cure Notice. (D.I. 591). The First Supplemental Cure Notice purports to supersede the Cure Notice but also recites that deadlines set forth in the Court s sale procedures order remain in place. Out of an abundance of caution, McMoRan files this objection an d reserves rights to amend and or supplement as set forth in the First Supplemental Cure Notice. Page 1

2 Case Document 596 Filed in TXSB on 06/16/17 Page 2 of 4 Agreements with McMoRan. Northstar does not describe the properties associated with the operating agreements or even indicate the dates off the applicable agreements. Northstar indicates a cure of $0.00 for each operating agreement. BACKGROUND 3. McMoRan owns a number of working interests in the Gulf of Mexico Outer- Continental Shelf. McMoRan s interests include substantial working interest in High Island A 571 ( HI A571 ), a property described in the Declaration of Avery C. Alcorn in Support of First Day Pleadings ( Avery Declaration ). (See D.I. 106, , ). Operations on HI A571 are conducted pursuant to the Operating Agreement. 4. Debtor has indicated it is netting interest to McMoRan due to allegedly unpaid joint interest billings. However, upon information and belief, Debtor failed to pay service providers working on the job, which has resulted in over $1.4 million in liens filed against HI A 571. (See D.I ; Northstar First Day Hearing Ex. 37). As set forth on the summary attached hereto as Exhibit A, the total liens asserted total $1,438,610.60, an amount which may be slightly reduced due to some payments as indicated on the exhibit. 5. In addition, Northstar began netting McMoRan s share of production in October McMoRan estimates this netting resulted in $538, in revenue withheld from McMoRan as of the end of March LIMITED OBJECTIONS 6. McMoRan objects to the Cure Notice for the following reasons: a) The Cure Notice fails to provide sufficient information on its face to allow McMoRan to clearly identify the contracts and properties at issue. The Cure Notice lists three operating agreements (which appears to have been revised to one in the First Supplemental Cure Page 2

3 Case Document 596 Filed in TXSB on 06/16/17 Page 3 of 4 Notice). McMoRan objects to the original Cure Notice as insufficient for failing to adequately describe the agreements. b) With respect to the operating agreement for High Island A571, McMoRan objects to the cure amount of $0.00. As noted above, Northstar failed to maintain the property free of service provider liens in default of its obligations under the Operating Agreement and further failed to pay McMoRan its share of oil and gas revenues since October The proper cure amount would include funds to clear the approximately $1.4 million in liens and to pay McMoRan $538, in withheld revenues. c) Due to the inadequate description, McMoRan reserves objections with respect to the remaining contracts and further reserves all objections related to the First Supplemental Cure Notice. 7. Moreover, while the Cure Notice indicates objections based on adequate assurance of future performance are reserved to a later deadline, McMoRan expressly reserves them here. Any purchaser of High Island A571 will need to provide for cure of liens and be in a position to provide financial assurance for decommissioning obligations. McMoRan reserves these objections. RESERVATION OF RIGHTS 8. McMoRan reserves its rights with respect to the Cure Notice, adequate assurance of future performance, Northstar s sale process, all rights with respect to any claim it may assert in this case, including, but not limited to, administrative claims, and all other rights in this case. Page 3

4 Case Document 596 Filed in TXSB on 06/16/17 Page 4 of 4 Dated: June 16, Respectfully Submitted, By: /s/ Bradley C. Knapp Omer F. Kuebel III (Federal Bar 32595) Bradley C. Knapp (Tex ) LOCKE LORD LLP 601 Poydras Street, Suite 2660 New Orleans, Louisiana Telephone: (504) Fax: (504) rkuebel@lockelord.com bknapp@lockelord.com Philip G. Eisenberg Texas State Bar No Brooke B. Chadeayne Texas State Bar No JPMorgan Chase Tower 600 Travis Street, Ste Houston, Texas Tel. (713) Fax. (713) ATTORNEYS FOR MCMORAN OIL & GAS, LLC CERTIFICATE OF SERVICE The undersigned certifies that this List was served electronically on June 16, 2017 via ECF those parties registered to receive ECF service. /s/ Bradley C. Knapp Bradley C. Knapp Page 4

5 Case Document Filed in TXSB on 06/16/17 Page 1 of 1 EXHIBIT A AP Name Debtor/Defendant Amount Area Payment / Adjusted, Recorde Cancelle Affected Affected Net Block Field Name Area Block Block / Offset Payment / Offset Comment Net Block d d/ Block(s) Lease(s) Amount Name Amount Amount in Release Status A & B VALVE AND PIPING SYSTEMS, LLCNorthstar Offshore Group, LLCMcMoRan Oil & Gas LLC $ 4, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 4, $ - $ 4, Yes No ARK*LA*TEX WIRELINE SERVICES, LLC Northstar Offshore Group, LLC $ 24, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 24, $ (24,112.40) Paid 3/8/16 w check #16948 $ - Yes No Paid ARK*LA*TEX WIRELINE SERVICES, LLC Northstar Offshore Group, LLC $ 5, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 5, $ - $ 5, Yes No Paid BLANCHARD CONTRACTORS, INC. Northstar Offshore Group, LLC $ 1, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 1, $ - $ 1, No No CARDINAL COIL TUBING, LLC Northstar Offshore Group, LLC $ 30, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 30, $ (30,413.40) Paid 7/18/16 w/ check #17293 $ - Yes Yes Released DIVERSE SCAFFOLD SOLUTIONS, LLC Northstar Offshore Group, LLC $ 10, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 10, $ - $ 10, Yes No INTEGRITY SUPPLY, LLC Northstar Offshore Group, LLC $ 4, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 4, $ - $ 4, No No OFFSHORE CONTRACT SERVICES, LLC Northstar Offshore Group, LLC $ 1,057, HI A-442HI A-443HI A-571 HIGH ISLAND 571OCS-G 11383OCS-G 03241OCS-G High Island A-571 HI A571 $ 929, $ (153,335.70) Pmt on 8/5/16; Tot Amt. $300M; $153M Alloc to HI A571 $ 776, No No PREDATOR PRESSURE CONTROL & CRAN Northstar Offshore Group, LLC $ 5, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 5, $ - $ 5, Yes No Paid PRODUCTION HOOK-UP SERVICE, INC. Northstar Offshore Group, LLC $ 295, HI A-571 HIGH ISLAND 571 OCS-G High Island A-571 HI A571 $ 295, $ - $ 295, Yes No