Offshore oil producer Fieldwood Energy LLC on June 11 was sued by an insurance provider for allegedly failing to post $19.2 million in collateral for performance bonds, according to a Texas state court filing.
Aspen American Insurance Co. issued the bonds roughly two years ago, but within the last 60 days requested that Fieldwood post $19.2 million in collateral, said Richard Fulton, an attorney representing Aspen in the lawsuit.
A Fieldwood representative did not immediately respond to a request for comment.
Debt ratings agency Fitch Inc. in May downgraded Fieldwood's long-term issuer default rating two notches to C from CCC, signaling it was highly vulnerable to a risk of default. Fitch cited a "tenuous liquidity position" and weak hedging program for the downgrade, among other reasons.
Noble Energy Inc., which sold its Gulf of Mexico assets to Fieldwood for $710 million in 2018, and the U.S. Department of Interior are parties that are protected by the bonds, according to Aspen's filing.
Offshore oil and gas companies have been hard hit by a steep decline in oil prices since March amid the spread of coronavirus and an unexpected price war.
"If they're in financial difficulties, then they won't have the financial wherewithal to post $19.2 million in collateral, but we've got to at least try," said Fulton. He declined to comment on why Aspen requested the collateral.
Representatives from Noble Energy and Interior Department did not immediately respond to requests for comment.
Recommended Reading
US Drillers Add Oil, Gas Rigs for First Time in Five Weeks
2024-04-19 - The oil and gas rig count, an early indicator of future output, rose by two to 619 in the week to April 19.
Strike Energy Updates 3D Seismic Acquisition in Perth Basin
2024-04-19 - Strike Energy completed its 3D seismic acquisition of Ocean Hill on schedule and under budget, the company said.
Santos’ Pikka Phase 1 in Alaska to Deliver First Oil by 2026
2024-04-18 - Australia's Santos expects first oil to flow from the 80,000 bbl/d Pikka Phase 1 project in Alaska by 2026, diversifying Santos' portfolio and reducing geographic concentration risk.
Iraq to Seek Bids for Oil, Gas Contracts April 27
2024-04-18 - Iraq will auction 30 new oil and gas projects in two licensing rounds distributed across the country.
Vår Energi Hits Oil with Ringhorne North
2024-04-17 - Vår Energi’s North Sea discovery de-risks drilling prospects in the area and could be tied back to Balder area infrastructure.