COMPANY NEWS: LyondellBasell Industries files Chapter 11 bankruptcy

Jan. 26, 2009
LyondellBasell Industries has filed for reorganizational bankruptcy for its US operations and Basell Germany Holdings.

LyondellBasell Industries has filed for reorganizational bankruptcy for its US operations and Basell Germany Holdings. The filing does not include LyondellBasell’s other companies outside the US.

The US companies filed for Chapter 11 protection in the Southern District of New York in Manhattan on Jan. 6.

In other recent company news:

  • The UK High Court has named Ernst & Young LLP as administrators of Oilexco North Sea Ltd. The company is seeking buyers for the business and its assets because banks refused to grant loans to carry out its drilling and development program (OGJ Online, Jan. 4, 2009).
  • France’s Total SA plans to help commercialize Colorado oil shale by acquiring a 50% interest in IDT Corp.’s American Shale Oil LLC (Amso). The transaction is expected to close during the first quarter. The transaction’s value was not immediately disclosed.
  • A “battle of the minnows” is shaping up as Sydney-based Drillsearch Energy Ltd. has made an all-share, off-market takeover bid for Melbourne junior 3D Oil Ltd. Drillsearch is offering four of its shares for each share of 3D Oil.
  • Repsol YPF SA, repeating announcements it made last fall, has told an investors’ conference it will spend €500 million in 2008-12 to develop the Carioca discovery in Brazil’s presalt region.

LyondellBasell bankruptcy

During Jan. 8 court proceedings, executives said LyondellBasell needed immediate funds to pay more than $1 billion in debt and had run out of cash to finance operations.

US Bankruptcy Judge Robert Gerber approved the company’s request to access $2.167 billion in interim debtor-in-possession financing from a group of lenders and also approved a separate $100 million super priority emergency loan being provided by Citibank.

“During the past two quarters, we have seen a dramatic softening in demand for our products and unprecedented volatility in raw materials costs,” Volker Trautz, LyondellBasell chief executive officer, said in a company news release.

Trautz called December “particularly difficult, as many of our customers postponed orders to reduce their inventories.” LyondellBasell expects its economic crunch will be short term and expects customers to increase their purchasing in 2009.

He called LyondellBasell’s core businesses of fuels, chemicals, plastics, and technology “fundamental to the global economy.”

LyondellBasell Industries is based in The Netherlands and privately owned by Access Industries, founded in 1986 by US industrialist Leonard Blavatnik.

Basell International Holdings paid $12.7 billion for Houston-based Lyondell Chemical last year.

E&Y seeks Oilexco buyers

Oilexco has fields in the UK North Sea with proven oil reserves, which produce 16,000 b/d. Some of its key operations are the Brenda and Nicol fields. The Shelley field is being drilled and is expected to produce more than 30,000 b/d.

E&Y said it received enquiries from several interested parties that wished to buy the whole or part of the company’s business and assets. In the interim, it plans to continue with existing operations.

RBC Capital Markets said the company’s administration process would probably mean reduced rig commitments and cash for shareholders, assuming a price of $50/bbl and bids for its assets. It warned that potential buyers could snap up the assets cheaply as sources of capital have dried up and potential bidders are hoarding cash.

“Any sale proceeds would go first to the banks that have lent some $700 million to the company. The administrator would then look to settle the company’s outstanding unsecured liabilities, some $200 million,” RBC Capital Markets added.

Oilexco Inc., Calgary, the parent company, will be delisted from the Toronto Stock Exchange at the close of market on Feb. 9, “for failure to meet the continued listing requirements.”

Total’s Colorado shale stake

Total’s agreement calls for the French company and IDT, a multinational holding company, to jointly develop, produce, and commercialize shale oil using a new in-situ technology on Amso’s federal research lease acreage in western Colorado.

Total will provide funding during the research, development, and demonstration phase of the project, and technical assistance throughout the life of the project.

Amso is going to manage operations during the RD&D phase, and then Total will assume management responsibilities during the subsequent commercial phase.

“Our investment in Amso furthers our commitment to developing unconventional hydrocarbons,” said Yves-Louis Darricarrere, Total’s E&P president.

Drillsearch moves on 3D Oil

3D Oil immediately responded by telling shareholders to reject the offer, which it said does not reflect the company’s true value.

3D Oil has a strong asset in yet-to-be developed West Seahorse oil field in the Bass Strait as well as cash reserves of about $12 million (Aus.).

Drillsearch has an extensive portfolio of exploration and production assets in Australia, Papua New Guinea, and Canada. Key production comes from the Surat and Cooper basins, and it has yet-to-be developed fields in the offshore Bonaparte basin off northern Australia. The company moved to a 19.9% holding in 3D Oil prior to the takeover announcement.

Repsol YPF’s Brazil plans

Repsol YPF has a 25% stake in the Santos basin BM-S-9 Block that contains the Carioca find, while Brazil’s mixed capital Petroleo Brasilerio SA (Petrobras) holds 45%, and BG Group holds the remaining 30%.

The investment announcement follows Repsol YPF’s report last week to Brazil’s hydrocarbons regulator Agencia Nacional do Petroleo (ANP) that it discovered hydrocarbons on BM-S-48 Block, 185 km off Sao Paulo state (OGJ Online, Jan. 15, 2009).

The consortium hasn’t yet made an official reserves estimate for Carioca, but the head of ANP in April said the find could contain 33 billion boe, possibly making it one of the biggest oil finds ever.

Repsol YPF in its 2008-12 capital expenditure plan has earmarked €12.3 billion in investments in key growth projects in its upstream, downstream, and LNG areas.

Last September, Brazil’s Expansion newspaper reported that Repsol YPF would invest €500 million in Brazil as part of a strategic plan intended to almost treble the firm’s annual profits during 2008-12.

The report said the group had begun drilling at a number of sites in Santos oil field off Brazil, described as “one of the regions with the greatest potential oil reserves in the world.”

In early October, Repsol YPF began drilling wells in the Santos basin, using the Sovereign Explorer semisubmersible rig, which was to be deployed on the BM-S-48 Block, in 5,000 m of water, 120 km off Ilha Bela, Sao Paulo.