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D&L Energy Asset Sale Approved by Bankruptcy Court

A Denver company has been approved to purchase the assets of embattled D&L Energy Inc., the Youngstown, OH-based company. Former owner Ben. W. Lupo in February was charged with violating the U.S. Clean Water Act.

Lupo, who plead not guilty to an incident that occurred in January, has since relinquished control of the company.

Under an agreement approved by a federal bankruptcy court, Resource Land Holding LLC (RLH) will pay $20.7 million for assets that include pipeline and operating agreements, lease inventories, equipment and four subsidiaries; it would not assume any liabilities.

According to court documents, D&L has 30,581 gross acres under lease in western Pennsylvania and across northeast Ohio.

The sale's approval caps one part of a much larger legal fight for D&L that is playing out in local, state and federal courts in Ohio.

A federal and state investigation led to a grand jury indictment in February after enough evidence was gathered from an incident that occurred Jan. 31, in which it was found that Lupo had ordered an employee of Hardrock Excavating, a sister company he also owned, to dump oilfield waste into a tributary at D&L headquarters in Youngstown (see Shale Daily, Feb. 19).

That waste eventually leaked into a stream and emptied into the Mahoning River, a major artery running through Youngstown. The investigation also was determined that Lupo had ordered the dumping on several different occasions.

In February, the Ohio Department of Natural Resources Division of Oil and Gas Resources Management revoked the operating permits of Hardrock and D&L, ordering D&L to cease all storage and injection well operations in the state.

D&L appealed that decision with the Ohio Oil and Gas Commission, an independent board that oversees decisions made by the chief of ODNR's oil and gas division, with no success after the commission ruled to uphold the order in June (see Shale Daily, June 28).

When D&L filed for Chapter 11 bankruptcy protection in April, it cited high clean-up costs related to the dumping incident and other business liabilities, including more than $5 million that it owed to its creditors, according to court documents.

RLH invests in properties with a wide-array of resources, including agricultural, mining and timber assets.

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