As Kansas City, MO-based Mountain Energy Corp. was forced intobankruptcy and its assets seized last week, more allegations wereemerging that the gas marketer spent millions of dollars of companyfunds on stock in a five-year-old e-business company whose valuehas nose-dived over the past year.

In papers filed in a federal bankruptcy court in Missouri,Anadarko Energy Services Co., which paid the marketer $8.7 millionfor 3 Bcf of storage gas that it has yet to see, claimed “a part orall of the funds” that it gave Mountain Energy “were used topurchase speculative stock in Sagent Technology, a dot.com start-uptrading on the NASDAQ stock exchange.”

Mountain Energy bought the stock in Sagent Technology at”approximately $40 per share,” Anadarko Energy said, adding that it”currently trades in the range of $3 to $5 per share.” Stock inSagent Technology, which is based in Mountain View, CA, was listedat 3 3/16 at mid-day Friday.

Moreover, Anadarko Energy said that based on a “brief on-siteaudit” of a facility that was to have been storing the 3 Bcf of gasit purchased from Mountain Energy, it now believes the marketer mayhave sold the same gas to multiple parties.

In addition to the $8.7 million, Anadarko Energy said MountainEnergy owes it about $23.2 million for gas that it delivered to themarketer last summer. Mountain Energy has “failed and refused” topay for the gas, it noted.

In the U.S. Bankruptcy Court for the Western District ofMissouri, Mountain Energy filed a consent order last week in whichit agreed not to contest efforts by creditors to force it intoChapter 7 bankruptcy.

The company took this action last Monday just prior to ascheduled hearing in which Bankruptcy Judge Frank Koger was to haveruled on whether to grant a petition by creditors for involuntarybankruptcy.

Four companies — TransCanada Energy Marketing USA, Tenaska Marketing Ventures, Farmland Industries and DuCoa LP — brought the petition in the Missouri bankruptcy court last month, claiming they lost $24.6 million as a result of their business dealings with the marketer (See NGI, Oct. 30, 2000).

By filing the consent order, Mountain Energy essentially hasagreed to dissolve its business. All telephone calls to themarketer last week went unanswered. The court appointed Steven C.Block, a Kansas City attorney, as interim trustee. He was orderedto “immediately collect and take possession of the property of theestate” and all other assets, which then will be liquidated to paycreditors. Creditors’ claims against Mountain Energy are estimatedto be in the neighborhood of $70-$75 million.

Mountain Energy agreed to liquidate its business because theother option — re-organizing its troubled company and seekingcourt protection — wasn’t very realistic for the marketer. That’sbecause “there’s really no business left at this point toreorganize since we were unable to supply gas to our customers forthe month of November,” Carl R. Clark, a Kansas attorneyrepresenting the marketer, told NGI.

The first meeting of the company’s creditors will be held in30-40 days.

The marketer served more than 600 industrial and commercialcustomers in Missouri and Kansas, as well as sold and stored gasfor major gas suppliers. The first hint that something was amiss atMountain Energy came in early October when it notified most of itslarge gas customers that it wouldn’t be able to supply them attheir contracted-for rate.

Susan Parker

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