After receiving insufficient bids for its assets in New York State, two subsidiaries of Norway's Norse Energy Corp. ASA have entered Chapter 7 bankruptcy and face total liquidation.
According to documents filed in U.S. Bankruptcy Court for the Western District of New York, Judge Carl Bucki on Oct. 10 approved a motion to convert the bankruptcy filings of Norse Energy Corp. USA and Norse Energy Holdings Inc. from Chapter 11 to Chapter 7.
"As part of our agreement with the lender, we agreed to schedule an asset sale to pay back the $3.8 million that we borrowed, and hopefully have enough left over to provide for operating space," Norse executive vice president Dennis Holbrook told NGI's Shale Daily on Thursday.
"That asset sale really didn't amount to much of anything to speak of. We didn't accept any of the bids...[P]eople like the geology and they like the potential, but they don't like the political geography."
Norse holds oil and gas leases for about 130,000 net acres in the state's portion of the Marcellus and Utica shales (see Shale Daily, July 31).
"Now that it's in Chapter 7; it's in a liquidation form," Holbrook said. "The assets still could be bid on by anyone who's interested in bidding on them. It's up to the trustee to either find a way to sell the assets or liquidate the company."
Holbrook said the company had 10 employees at the beginning of September but let two go shortly thereafter. The latest move terminates the remaining eight employees.
"We had hoped that we would have had the ability to address what should have been relatively small debt and continue doing business, but the situation now is in the hands of our trustee, whose purpose is to liquidate the assets," Holbrook said.
Court documents show Mark Wallach, of the Buffalo, NY-based firm Penney, Maier & Wallach, was appointed trustee in the case (No. 12-13685-CLB) on Oct. 10. A creditors meeting has been scheduled for 1:30 p.m. on Nov. 19 at the Office of the U.S. Trustee, Olympic Towers, Suite 250, 300 Pearl St., Buffalo, NY.
The company has been unable to do much with its assets in New York due to the ongoing moratorium on high-volume hydraulic fracturing (HVHF). The state Department of Environmental Conservation (DEC) is working to finalize its supplemental generic environmental impact statement on HVHF, but a pending health impact analysis allegedly has stalled the process (see Shale Daily, Sept. 24, 2012).
"The legal question of whether or not [regulatory delays by the DEC] would extend the leases still needs to be decided," Holbrook said. "If you think about it, we're talking years that would be added on to the lease life, if we prevail."
Holbrook added that the parent company was also still considering its options.
"They're trying to determine in Norway whether there is any interest in being in a position to submit any kind of a bid for the assets," he said. "Anybody can bid, including parties in Norway if they choose to. What we're trying to evaluate right now is whether there is anybody that would choose to bid for the assets, including the Norwegian parent."
Norse filed for Chapter 11 bankruptcy protection in December 2012 after a judge ruled the cash-strapped company had to deposit $7.65 million into an escrow account for a legal dispute with a driller, Bradford Drilling Associates LP (see Shale Daily, Dec. 10, 2012). Bradford sued Norse in December 2011 over a halted joint venture drilling program.