Case Document 2973 Filed in TXSB on 02/24/14 Page 1 of 10 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS

Transcription

1 Case Document 2973 Filed in TXSB on 02/24/14 Page 1 of 10 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF TEXAS In re ATP Oil & Gas Corporation DEBTOR Chapter 11 Case No Judge Marvin Isgur MOTION OF CETCO OILFIELD SERVICES COMPANY, LLC FOR ALLOWANCE AND PAYMENT OF ADMINISTRATIVE EXPENSE THIS MOTION SEEKS AN ORDER THAT MAY ADVERSELY AFFECT YOU. IF YOU OPPOSE THE MOTION, YOU SHOULD IMMEDIATELY CONTACT THE MOVING PARTY TO RESOLVE THE DISPUTE. IF YOU AND THE MOVING PARTY CANNOT AGREE, YOU MUST FILE A RESPONSE AND SEND A TRUE AND CORRECT COPY TO THE MOVING PARTY. YOU MUST FILE AND SERVE YOUR RESPONSE WITHIN 21 DAYS OF THE DATE THIS WAS SERVED ON YOU. YOUR RESPONSE MUST STATE WHY THE MOTION SHOULD NOT BE GRANTED. IF YOU DO NOT FILE A TIMELY RESPONSE, THE RELIEF MAY BE GRANTED WITHOUT FURTHER NOTICE TO YOU. IF YOU OPPOSE THE MOTION AND HAVE NOT REACHED AN AGREEMENT, YOU MUST ATTEND THE HEARING. UNLESS THE PARTIES AGREE OTHERWISE, THE COURT MAY CONSIDER EVIDENCE AT THE HEARING AND MAY DECIDE THE MOTION AT THE HEARING. REPRESENTED PARTIES SHOULD ACT THROUGH THEIR ATTORNEY. THERE WILL BE A HEARING ON THIS MOTION ON APRIL 3, 2014, AT 1:30 P.M. IN COURTROOM 404, 515 RUSK, HOUSTON, TEXAS MAY IT PLEASE THE COURT: CETCO Oilfield Services Company, LLC ( CETCO ), a creditor and party-in-interest to this proceeding, by and through its undersigned counsel, and pursuant to 11 U.S.C. 503, files this Motion for Allowance and Payment of Administrative Expense (the Motion ) and moves this Court for entry of an order authorizing and directing the debtor-in-possession, ATP Oil & Gas Corporation ( ATP or the Debtor ), to pay CETCO s administrative expense claim in the _2.Docx

2 Case Document 2973 Filed in TXSB on 02/24/14 Page 2 of 10 amount of $1,579, plus attorney s fees, costs, and interest, and with respect thereto represents as follows: JURISDICTION 1. This Court has jurisdiction over the Motion pursuant to 28 U.S.C. 157 and This matter is a core proceeding pursuant to 28 U.S.C. 157(b)(2)(B). 2. Venue is proper in this district pursuant to 28 U.S.C and FACTUAL BACKGROUND 3. On August 17, 2012, (the Petition Date ), ATP filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division. ATP continues to operate its business as a debtor-inpossession pursuant to 11 U.S.C and As of the Petition Date, ATP asserted that its Clipper Pipeline Project in the Gulf of Mexico (the Clipper Project ) was essential to a successful reorganization. As of the Petition Date, the Clipper Project had not yet been brought online and needed extensive, additional work before it was complete and able to produce hydrocarbons for the benefit of the estate _2.Docx -2-

3 Case Document 2973 Filed in TXSB on 02/24/14 Page 3 of CETCO is in the business of performing services and providing equipment or materials for use in conjunction with hydrocarbon exploration, development, production, processing, and/or transmission. 6. Subsequent to the Petition Date, on November 9, 2012, in the ordinary course of ATP s business, ATP and CETCO entered into a master service agreement (the MSA ). 7. The MSA provided that CETCO would undertake certain jobs and projects to facilitate ATP s exploration, development, production, and/or transmission of hydrocarbons in relation to the Clipper Project. A true and correct copy of the MSA is attached hereto as Exhibit A. 8. Pursuant to the MSA, ATP and CETCO executed a Work Order (MSA ) (Job No. J10139) (the Work Order ), setting forth the details of CETCO s performance of well test and filtration services for the GC300SS002 Clipper Gas Well (the Clipper Gas Well ). A true and correct copy of the Work Order is attached hereto as Exhibit B. 9. CETCO performed the services and work as described in the Work Order. ATP was invoiced $2,379, and had paid $799, as of November 7, 2013, leaving an unpaid balance of $1,579, On November 7, 2013, CETCO sent ATP an invoice (Invoice No. RESIPJ10139) (the Work Order Invoice ) in the amount of $1,579,358.08, representing the cost of the well test and _2.Docx -3-

4 Case Document 2973 Filed in TXSB on 02/24/14 Page 4 of 10 filtration services CETCO performed for the Clipper Gas Well during the months of August, September, and October, The Work Order Invoice was reviewed and approved by Clay Wilkins, who served as Project Engineer for ATP and Bennu Oil & Gas, LLC ( Bennu ). A true and correct copy of the Work Order Invoice is attached hereto as Exhibit C. A true and correct copy of the approval is attached hereto as Exhibit D. 12. As of the filing of the Motion, the Work Order Invoice remains unpaid. 13. Pursuant to the CETCO Energy Services Terms and Conditions and annexed to and incorporated into the Work Order, invoices are due and payable within 30 days from the date of invoice. If payment is not made, interest on the amount of the unpaid principal balance will be charged at the rate of 1% per month (12% per annum) from the expiration of the 30 day period until paid. See Exhibit B, at pp 6,10. Should an account have to be collected through judicial proceedings, all court costs and attorneys fees are to be paid by ATP. See Exhibit B, at pp 6, On June 21, 2013, Robert Latimer III, the Debtor s Chief Restructuring Officer, testified before this Court at the hearing on the Motion to Approve Sale that ATP did not intend to pay the capital expenditures required to bring the Clipper Project online. Instead, Mr. Latimer indicated that pursuant to the Asset Purchase Agreement, the purchaser would assume those obligations. The relevant portion of Mr. Latimer s cross examination testimony is attached _2.Docx -4-

5 Case Document 2973 Filed in TXSB on 02/24/14 Page 5 of 10 hereto as Exhibit E. In response to cross-examination by counsel for Bluewater Industries, Mr. Latimer testified as follows: Q: Mr. Latimer, you were just asked about the expenses that might be incurred on Clipper, but not paid. You aren t suggesting that the Debtor would incur expenses and somehow stiff the vendors are [sic] Clipper, are you? A: That s not the that s not the intent. The my belief is that these things that are expenses incurred for acquired properties are ones that would be be paid or resolved by the buyer. Q: Is there a provision in the APA that would require the buyer to assume those obligations, assume responsibility for paying those things? A: That s the what I said was my understanding. I m not sure how it s documented or whether it is in the agreement, per se. Q: But that is your understanding? A: Yes. See Exhibit E, p Ms. Guffy s line of questioning arose subsequent to Mr. Latimer s cross-examination testimony regarding the Debtor s remaining capital expenditures relative to the Clipper project. The exchange was as follows: Q: Looking at the Clipper Project, the last expenditure is the week of July 8th, Is that the last time you ll need to make a CAPEX payment on Clipper? A: Well, probably not. I believe that there are some subsequent expenses classified as capital expenditures that will be incurred in connection with the bringing online the gas well. And there s also a _2.Docx -5-

6 Case Document 2973 Filed in TXSB on 02/24/14 Page 6 of The Clipper Project wells, including the Gas Well, for which CETCO has provided valuable services, are among the assets purchased by the DIP lenders, including Bennu, in the Asset Purchase Agreement approved by this Court on October 17, (Dkt. No. 2706). 16. On November 18, 2013, CETCO, through its Vice President, Tim Power, was informed by Mr. Wilkins that CETCO s Work Order Invoice had been approved on November 15, 2013, and given to Leland Tate, Chief Executive Officer of ATP. See Exhibit D. 17. On November 21, 2013, upon inquiry by Mr. Power as to the status of the Work Order Invoice, Mr. Tate informed Mr. Power that ATP had sent the Work Order Invoice to Bennu but that Bennu had refused to pay the Work Order Invoice. See Exhibit D. need for probably some additional capital expenditures to correct a situation and and install a new umbilical cable that will provide electrical connectivity to the two wells Q: Are any of those payments, payments that are going to have to be made July 15th through August 30th? A: We don t have them budgeted, obviously. And we certainly don t anticipate making them. I can t say that we won t have something that happens that would cause us to incur some costs in that six-week period. A: Okay. But you have no plans to incur those costs and have them paid during that six-week period. A: That s correct. Q: Okay. A: I we may incur them; we may not pay them. Q: So you re going to it s your intention to incur them, if they come up, on Clipper, just not pay them. A: Yes. See Exhibit E, pp _2.Docx -6-

7 Case Document 2973 Filed in TXSB on 02/24/14 Page 7 of 10 RELIEF SOUGHT 18. CETCO respectfully requests that this Court enter an Order approving and directing ATP to pay CETCO the amount of its Work Order Invoice totaling $1,579, plus interest of $25,269.73, 2 as of January 28, 2014, and continuing to accrue thereafter at the rate of 1% per month (12 % per annum) on the unpaid principal balance from the expiration of the 30 day period after the November 9, 2013 Work Order Invoice date until paid. See Exhibit C. CETCO also seeks to recover all court costs and attorney s fees associated with this Motion. BASIS FOR RELIEF 19. Section 503 of the Bankruptcy Code governs the allowance of administrative-expense claims. In particular, Section 503(a) authorizes an entity to file a request for the payment of an administrative expense claim. Section 503(b) then provides that the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case are administrative expenses. 20. A prima facie case under Section 503(b)(1) may be established by evidence that (1) the claim arises from a transaction with the debtor-in-possession; and (2) the goods or services supplied enhanced the ability of the debtor-in-possession's business to function as a going 2 December 10, 2013 through January 9, 2014 (1% * $1,579, = $15,793.58) January 10, 2014 through January 28, 2014 (1% * 18/30 * $1,579, = $9,476.15) _2.Docx -7-

8 Case Document 2973 Filed in TXSB on 02/24/14 Page 8 of 10 concern. In re Transamerican Natural Gas Corp., 978 F.2d 1409, 1416 (5th Cir. Tex. 1992). There cannot be any question that the amounts due CETCO are administrative expenses. 21. T]he purpose of the priority treatment afforded by 503 is to encourage third parties to provide necessary goods and services to the debtor-in-possession so that it can continue to conduct its business, thus generating funds from which prepetition creditors can be paid. Transamerican, 978 F.2d at 1419 Not only does the estate enjoy the direct and measurable benefit of the product created because of the post petition services provided, the estate also receives other less readily calculable benefits, such as the ability to continue to conduct business as usual. Id. 22. Mr. Latimer s testimony, as well as the from Mr. Tate, indicate that ATP now seeks to avoid paying CETCO for the work performed on the Clipper Gas Well 3 notwithstanding the fact that the Debtor induced CETCO, after the Petition Date, to perform the well test and filtration services for the Clipper Gas Well, as evidenced by the Master Service Agreement and Work Order, executed by representatives of ATP The performance of the services by CETCO was instrumental to bringing the Clipper Project Online and to a point that it could produce a benefit to the estate and be sold to Bennu. Accordingly, ATP was provided and derived a direct economic benefit from CETCO s work. Moreover the Clipper Gas Well was included in the assets sold under the Asset Purchase Agreement to Bennu. In light of this benefit to the estate, CETCO is entitled to an administrative 3 4 See Exhibits D and E. See Exhibits A and B _2.Docx -8-

9 Case Document 2973 Filed in TXSB on 02/24/14 Page 9 of 10 expense claim pursuant to 11 U.S.C. 503(b), and such claim should be given administrative expense priority under 11 U.S.C. 507(a)(2). WHEREFORE CETCO moves for an Order (i) allowing a first priority administrative expense claim in the amount of $1,579, plus interest of $25, as of January 28, 2014, and continuing to accrue thereafter at the rate of 1% per month (12 % per annum) on the unpaid principal balance from the expiration of the 30 day period commencing after the November 9, 2013 Work Order Invoice date until paid plus court costs and attorneys fees associated with bringing its Motion; and ii) directing ATP to immediately pay the allowed administrative expense claim. Respectfully submitted, Michael D. Rubenstein (Bar #22860) LISKOW & LEWIS 1001 Fannin Street, Suite 1800 Houston, Texas mdrubenstein@liskow.com (713) Office (713) Mobile (713) Fax ATTORNEYS FOR CETCO OILFIELD SERVICES COMPANY, LLC _2.Docx -9-

10 Case Document 2973 Filed in TXSB on 02/24/14 Page 10 of 10 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 24th day of February, 2014, a true and correct copy of the Motion of CETCO Oilfield Services Company, LLC for Allowance and Payment of Administrative Expense was filed electronically with the Clerk of Court using the CM/ECF system. Notice of this filing will be sent to Debtor s counsel and to all counsel and parties registered to receive electronic service by operation of the court s electronic filing system. Michael D. Rubenstein _2.Docx -10-

11 Case Document Filed in TXSB on 02/24/14 Page 1 of 43 EXHIBIT "A"

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54 Case Document Filed in TXSB on 02/24/14 Page 1 of 16 EXHIBIT "B"

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70 Case Document Filed in TXSB on 02/24/14 Page 1 of 1 EXHIBIT "C"

71 Case Document Filed in TXSB on 02/24/14 Page 1 of 6 From: To: Cc: Subject: Date: Tim Power Leland Tate Michael D. Rubenstein; Tom LeBon; Ronnie Luquette FW: ATP - GC300SS002 - Clipper Gas Well Start-Up - CETCO Invoice RESIPJ10139 Thursday, November 21, :08:23 PM Leland, Please see the trail below from Clay Wilkins. I need to know the status on this invoice. Was it sent to Bennu Oil & Gas? Thanks, Tim Power From: Clay Wilkins [mailto:cwilkins@atpog.com] Sent: Monday, November 18, :41 AM To: Tim Power Cc: Matt Thibodeaux; Ronnie Luquette Subject: ATP - GC300SS002 - Clipper Gas Well Start-Up - CETCO Invoice RESIPJ10139 Tim, Thanks for your thorough explanations. I initialed the invoice on Friday, Nov. 15, 2013, and handed off to Leland. I will attach this string to the invoice for back-up in case of an audit to explain the differences between the quote and invoice. I have no other involvement from this point forward in its processing or payment. Regards, Bennu Oil & Gas LLC Clay Wilkins Project Engineer (713) From: Tim Power [mailto:tim.power@cetco.com] Sent: Monday, November 18, :36 AM To: Clay Wilkins Cc: Matt Thibodeaux; Ronnie Luquette Subject: RE: ATP - GC300SS002 - Clipper Gas Well Start-Up - CETCO Invoice RESIPJ10139 Clay, Please see the answers below. Please let me know if you need further assistance. EXHIBIT "D"

72 Case Document Filed in TXSB on 02/24/14 Page 2 of 6 Thanks, Tim Power VP of Well Testing From: Clay Wilkins [mailto:cwilkins@atpog.com] Sent: Friday, November 15, :27 PM To: Tim Power Subject: RE: ATP - GC300SS002 - Clipper Gas Well Start-Up - CETCO Invoice RESIPJ10139 Tim, From Question # 3 Pumps What kind of pumps are you referring to? The quote had a Triplex Pump and a MAC 14 Pump 15K listed. The invoice had 4 Centrifugal Pump, 2 Air Diaphragm Pump, three 3 Air Diaphragm Pumps, two Pipeline Pumps Are you referring to the two Pipeline $1000/day each? Yes we are referring to the (2) pipeline pumps. From Question #5 - What was the requirement/reasoning to go from 2 to 4? The reason Cetco switched from 2 to 4 hose was because Murphy uses a 4 hose from the platform to the boat and the 2 hose Cetco proposed would have caused a restriction. In addition, the use of the 4 hose came from venting the 500 bbl tanks on the boat. The tanks could not be vented locally so we needed to add 4 hose to route the vents to a safe area. From a previous , why wasn t the Large Master $768.75/day included in the work order? This charge was originally quoted as WT-4429, 14C ESD System. We used the generic code of WT-4900 for the Large Master Panel instead of using the WT The price is the same. Regards, Clay From: Tim Power [mailto:tim.power@cetco.com] Sent: Thursday, November 14, :38 AM To: Clay Wilkins Cc: Ronnie Luquette; Jim Metteauer; Matt Thibodeaux; Locke Harris Subject: FW: ATP - GC300SS002 - Clipper Gas Well Start-Up - CETCO Invoice RESIPJ10139 Clay, We have added our answers to each of the questions listed below. Our cost estimate is an estimate based on what our engineers knew at the time this project was quoted. Items are added and changed during the project due to scope changes and when ATP & Murphy asked us to provide 3 rd party equipment as needed for the project. Please let me know if any further explanation is needed to have this invoiced approved.

73 Case Document Filed in TXSB on 02/24/14 Page 3 of 6 Kindest Regards, Tim Power VP of Well Testing From: Clay Wilkins [mailto:cwilkins@atpog.com] Sent: Wednesday, November 13, :05 PM To: Tim Power Cc: Leland Tate Subject: ATP - GC300SS002 - Clipper Gas Well Start-Up - CETCO Invoice RESIPJ10139 Tim, I ve tried to review this as quickly as I can, even after hours, to process this. I ve discussed my findings with Leland Tate, who was president for ATP. Here are a main points I need CETCO s help in backing up so I can continue to push this through on this end. I ve worked hard to be a CETCO advocate on this end in getting all eight previous installment invoices paid, but I need your assistance on this last one since the quote and invoice are so different. We had a budget based on the quote and were allocating funds as best as possible, but this last one has thrown us a curve. I fully recognize the job was extended offshore, but my questions below are about rates or lump sum portions, not durations. 1) Equipment Standby Amount of $224, accrued prior to mob date of 9/11/2013. Please provide any authorization or correspondence from ATP for these charges. This was covered by the letter sent to ATP in which Ross Frazer agreed to the charges. The rates were actually less than the letter estimated. This is due to the fact that the equipment was put on standby once it was actually staged and held for ATP. 2) Well Test Consumables, Engineering, and One Time Charges Quoted $24, Actual Costs Charges = $60, in Sep 2013 & $13, in Oct Please explain/justify the amount 202% over the quotation This charge is related to all one time charges over the life of the project. A large portion of this is mileage. The mileage costs increased due to personnel being mobilized and demobilized due to the storm, illness on the platform, regular crew changes, field personnel attending HAZOP and conducting site the survey; cost $ This also includes the following items which were large. 3 project specific crossovers which were manufactured for this job; cost $ we had planned on utilizing rental crossovers however no crossovers were available for rental and as such they were manufactured.

74 Case Document Filed in TXSB on 02/24/14 Page 4 of 6 Chains and binders which were requested by Murphy / ATP to secure equipment these items were sent via hotshot to dock; cost $ Specialty valves required by Murphy to utilize the pipeline pump; cost $ Cetco 4 hose which was cut to facilitate using the pipeline pumps; cost $ The chains, binders, valves and cutting of the hose were authorized by Bill Moore. 3) Well Test Equipment Dayrate Quoted $30,393.07/day in the Work Order. Actual Costs Charged daily during the operation = $33,706.70/day Please explain or produce authorization for this. The initial quoted rate assumed that the pumps for the pipeline project would be direct billed to ATP. However the rental company was unwilling to do this. As such we rented the pumps and recharged them such 3 rd party costs. This increased the cost $2000 per day. There were several other charges related to 3 rd party items and added items incurred due to the pipeline project and items not being direct billed. The 500 bbl tanks were not directed billed and due to this the price was higher than initially projected. The 4 SDV was added to meet Murphy s requirement for the pipeline pumps. PSV s were added to the 500 bbls tanks instead of locally venting them as is the normal practice. This was done at Murphy s request shortly before mobilization. In conclusion the primary reason for this increase was the 3 rd party pumps; however other items were added to meet Murphy s requirements and to ensure the project s success. 4) Filtration Consumables, Engineering, and One Time Charges Quoted $27,500. Actual Costs Charged = $26,454 for Sep and $9,740 for Oct. 2013, 31% over quoted. Please explain. Cost overruns occurred in 4 areas: Safety Systems added $4,154, Engineering Drawings & Documentation = $3,400, Mobilization of crew due to project extension = $1,425, and satellite phone usage charge of $765. 5) Filtration Equipment Dayrate Quoted $6,046.65/day. Actual Costs Charges ranges from $8,509.88/day to $8,660.48/day., 43.2% over the quote. Please explain or provide authorization for this overrun. The majority of this cost overrun came from changing from 2 to 4 hose system; $ / day along with rental items being higher than quoted of $299.42/day and under estimating hose and equipment needs in the estimate of $256.63/ day. These (3) items total $2, Sincerely, Bennu Oil & Gas LLC Clay Wilkins Project Engineer p.s. I will be out of the office this afternoon, but back in the office in the morning.

75 Case Document Filed in TXSB on 02/24/14 Page 5 of 6 From: Tim Power [mailto:tim.power@cetco.com] Sent: Thursday, November 07, :59 PM To: Clay Wilkins Cc: Ronnie Luquette; Sarah Thibodeaux; Rose Sabatier; Brandon Prudhomme; Carl Coldren; Jim Metteauer Subject: RE: Cetco Invoice for Clipper #2 Well Clay, Please see comments added below to your questions. Let us know if you would like to talk with our team that attended the pre-job meeting. Thanks, Tim Power From: Clay Wilkins [mailto:cwilkins@atpog.com] Sent: Thursday, November 07, :36 PM To: Tim Power Cc: Ronnie Luquette; Sarah Thibodeaux; Rose Sabatier; Brandon Prudhomme; Carl Coldren Subject: RE: Cetco Invoice for Clipper #2 Well CETCO, I have received and printed out the invoice and will be taking it to Accounting shortly for them to input. Then I ll begin my review. A few questions I have right out of the chute are: Field Ticket Date 9/1/2013 o Indicates Well Test Equipment starting 9/6/2013 and stopping 9/7/2013, however, I didn t think stuff was mobilized out until about 9/12/2013. Another piece of equipment starts on 9/1 and stops on 9/5 and another 9/8 > 9/8? What is that about? The well testing equipment and 2 personnel were mobilized at 1:30 pm on September 10 th, due to the personnel being mobilized the equipment went from the standby rate to operational rate at this time. The differences in the days is due to the items going onto standby as they were reserved for the job. Initially the equipment was supposed to ship on September 5/6 as such equipment was put on standby for the job as it was prepared and staged. The only item which actually went off of standby was the Coriolis Meter. This was requested by both Murphy and ATP to be staged due to the issue with whether or not their meter would meter allocation requirements. Once Murphy confirmed that ATP s meter met their requirements the Coriolis Meter was removed from the ticket.

76 Case Document Filed in TXSB on 02/24/14 Page 6 of 6 Field Ticket Date 8/19/2013 o More Well testing equipment in August? What is that $34, amount for when we didn t mobilize until around 9/12? Again to ensure that the major components for the job would be in place they were placed on standby to reserve them for ATP. The reason we had multiple standby rates is because equipment was only put on standby once it was dedicated to ATP. The cost of putting the equipment on standby to ensure it was available for the job was included in the original cost projection sent to ATP which they agreed to. I realize this was agreed to by Ross and he is no longer with the company. On my way to accounting now. Regards, Bennu Oil & Gas LLC Clay Wilkins Project Engineer From: Tim Power [mailto:tim.power@cetco.com] Sent: Thursday, November 07, :59 PM To: Clay Wilkins Cc: Ronnie Luquette; Sarah Thibodeaux; Rose Sabatier; Brandon Prudhomme; Carl Coldren Subject: Cetco Invoice for Clipper #2 Well Importance: High Clay, Please find the attached invoice for the Clipper #2 well. Thanks, Tim Power

77 Case Document Filed in TXSB on 02/24/14 Page 1 of 4 EXHIBIT "E"

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