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Some could get paid by SemGroup

 
BY JACK MONEY    Comment on this article Leave a comment
Published: November 7, 2008

Oil producers and natural gas producers owed money by SemGroup got both some good and not-so-good news this week from an attorney who has been working the case.

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AT A GLANCE

ISSUES AT STAKE IN THE

SEMGROUP BANKRUPTCY

→20 day claims. Producers’ attorneys argue these claims, on money SemGroup owes to producers for product it bought within 20 days of the bankruptcy, are a priority and should be paid at 80 pecent levels from unsecured assets, the same as administrative claims being filed by attorneys representing the bankrupt company. The issue could be resolved early next year.

→Lien claims and the trust process. Lien claims could be subordinated to the claim of the unsecured debtor in the case, Bank of America, and that issue is being argued. Even if producers win here, the producers’ committee still must build global lists of claims from each state to create trusts that could be paid the money.

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Steven W. Bugg, with McAfee & Taft, told Wildcatter Wednesday luncheon attendees this week they could get at least a percentage of the money they are owed by SemGroup early next year.

But it might be years before they learn whether they can recover more of what they are owed because of specialized state statutes dealing with liens and trusts, the merits of which are being argued as the case moves forward, he said.

Bugg said the biggest task for attorneys early on was to educate the court about the oil and gas business.

"Royalty interest owner, working interest owner, operator, oil and gas lease — none of those terms had any meaning to them,” Bugg said. "So, one of our first tasks was to educate the judge and help him understand the industry; how it works, why it works, why the statutes we are relying on were adopted, what they mean and who they were designed to protect.”

Bugg said he gives the judge in the case "full credit” for recognizing his lack of understanding, and added he’s worked hard to correct the problem.

About 150 people attended the luncheon, sponsored by the Oklahoma Independent Petroleum Association.

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