By February 20, 2016 Read More →

Venoco misses interest payment, blames Calif. pipeline closure

Closure of All American Pipeline in May 2015 cut back Venoco production by 50%

Venoco Inc. says the closure of a California pipeline after a huge 2015 leak has affected its operations and is partly to blame for management’s decision to skip a $13.7 million interest payment due Feb. 16.

Venoco

Crews work to clean up a portion of the coastline following the California pipeline spill.

The Denver-based company, which operates in southern California, said the declining price of oil and the ongoing closure of Plains All-American pipeline have presented significant challenges. The pipeline ruptured due to external corrosion near Santa Barbara, California in May 2015.

Venoco says the down pipeline, for which there is no certain restart date, has resulted in the curtailment of more than 50% of it’s production.

The missed payment is on the company’s 8.875% senior unsecured notes, but management said in a press release that an “event of default” would not occur unless the payment isn’t made by March 17, 30 days after Feb. 16.

Venoco says it has sufficient liquidity to continue normal oil and gas operations and meet its regular financial obligations for some time.

Venoco“Today’s announcement represents just one step toward better positioning our company to tackle the ongoing financial challenges facing our industry,” said Mark DePuy, Venoco CEO.

“We are carefully weighing our options to reduce debt, and have had positive discussions with our lenders about the possibility of restructuring the balance sheet to do so.”

Venoco says it has been exploring alternatives to address the challenges and strengthen its underlying financial position. As part of this effort, Venoco has engaged with its lenders in discussions around how best to reduce the company’s debt and ensure its long term liquidity needs are met, including the possibility of restructuring the company’s balance sheet.

“Our substantial cash position allows us to continue to meet all of our current obligations to pay our employees, vendors, and others, fund our ongoing operations and to pursue and advance other business opportunities,” said DePuy.

“We look forward to using this interest payment grace period to continue discussions with our creditors aimed at achieving financial strength, while serving the long-term interests of our creditors, employees and the communities in which we operate.”

Venoco was co-founded in 1992 by Tim Marquez, who served as the company’s CEO until 2002. In 2012, Marquez acquired Venoco and took it private in a deal  valued at $382.7 million.

Posted in: Energy Financial

Comments are closed.