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EP Energy files for bankruptcy protection
US
HOUSTON-BASED EP Energy has filed for Chapter 11 bankruptcy protection, aiming to cut $3.3bn in debt under a proposed deal with Apollo Global Management and Elliott Man- agement. It is the 34th oil and gas company to file for bankruptcy protection this year, accord- ing to law firm Haynes & Boone, as the low oil price environment continues to sink certain operators.
EP’s CEO, Russell Parker, said in a statement the company had “reached an agreement in prin- ciple on a comprehensive restructuring with a number of its key creditors” and filed for Chapter 11 protection to “get the deal over the finish line”.
“Like other companies in our industry, we continue to experience challenging dynamics as a result of depressed commodity prices, and we have been very transparent about our ongoing efforts to actively manage our capital to control spending and preserve liquidity,” Parker said.
Under the proposed restructuring deal, Apollo would hold on to its stake in EP, having created the upstream company in 2012 through a spin-out from El Paso after the pipeline operator
was acquired by Kinder Morgan. Apollo and Elliott are proposing to convert their roughly 70% stake in the company’s 1.5-lien notes into 99% of the equity in the reorganised entity. Those lenders, along with other 1.5-lien holders, would also backstop $325mn of the company’s $436mn equity rights offering at a discount.
An ad-hoc group of the company’s unsecured bondholders has said it intends to object to the plan, which would hand them 1% of the new equity, describing it as “patently unfair”.
The bankruptcy filing comes after EP warned at the start of this year that it had six months to develop a plan and regain compliance while con- tinuing to trade on the New York Stock Exchange (NYSE). The company was subsequently delisted from the NYSE in May, after its stock collapsed from just under $1 per share to pennies.
Judge Marvin Isgur in Houston gave interim approval on October 4 for a series of adminis- trative first-day motions that would enable EP to continue operating in bankruptcy.
The company focuses on the Eagle Ford shale and Permian Basin in Texas.™
ENERGY TRANSITION
Chevron sets out plan to cut emissions
GLOBAL
CHEVRON has set out new goals to reduce greenhouse gas (GHG) emissions from both its crude oil and natural gas operations. The super-major is now targeting a 5-10% reduction in emission intensity from its oil production and a 2-5% cut in emission intensity from its gas pro- duction between 2016 and 2023.
The company said its measure of emission intensity uses what it calls equity basis, which combines direct and indirect emissions from its own output, subtracts indirect emissions associ- ated with electricity and steam that its operations require, and divides the result by production. This method does not include customer emis- sions, but a Chevron spokesperson told Reuters that the company was willing to work with gov- ernments to address this issue.
The method will be applied to all of Chev- ron’s upstream oil and gas assets, whether the super-major is their operator or not.
The company says it is already making pro- gress on emissions reduction, and thus a 2016 start date already takes it some way to achiev- ing its goals. In the Permian Basin, where it is ramping up activity, Chevron has reduced
flaring of methane from its gas production from 4% to 1%. The Houston Chronicle noted that this was better than industry averages in the Permian.
The super-major is also increasing its own use of renewables, and is using renewable electric- ity to power some of its operations in California and Texas, as well as investing in carbon capture and storage (CCS) projects in Australia and Can- ada. Chevron has spent over $1bn on such CCS projects to date, and expects this investment to reduce GHG emissions by about 5mn tonnes per year (tpy).
Chevron follows in the footsteps of other super-majors that have also been setting new goals for the reduction in emissions. Earlier this year, Royal Dutch Shell said it planned to cut emissions from its oil and gas operations and product sales by 2-3% during the 2016-21 period. However, Shell’s targets include Scope 3 emissions, which are defined as all indirect emis- sions that occur in the value chain of a company, not including indirect emissions from the gen- eration of purchased energy – which are covered under Scope 2.™
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