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Monday, May 18, 2009

netDockets Bankruptcy and Corporate Restructuring Blog: Harvest Oil & Gas/Saratoga Resources Creditors' Committee Appointed

The numbers are clear, (according to Baker Hughes) rig counts are down and are decreasing, with the exception of Haynesville Shale that actually reflected a current increase in rigs. I have submitted an additional previous post regarding the current," Rig Count," report.

Thousands of Petroleum Landmen through out the US are currently unemployed and energy companies, energy service companies and many of the vendors that have business & revenue linked to the energy industry are reeling from the energy industries current fledgling existence.

As reflected below in the submitted article, the energy industry is not immune to the current recession, so just as it is not and has never been contemplated to tax the Airlines and the Auto Industry, outrageous severance taxation after they enjoy a few quarters of successful profits, even when both have a consistent track record of bailouts, every few years...now is not the time to have federal or state taxation that will inhibit or stagnate domestic energy exploration or domestic energy production.

Arguably, a more comprehensive and possibly higher rate of taxation should have been in place prior to the recent boom in profits that many energy companies enjoyed, but taking into account that many of those recent profits have turned to loses and our needs for energy will certainly increase, especially when the economy rebounds, it is incumbent for law makers and policy decisions to be proactive for anticipation of what occurred last summer and for the reality that we are going to need to have ready available domestic sources of energy when the economy reinvigorates to a normal or excellent status.

Reasonable taxation for production should be implemented, but to be reasonable considerations must be given to fostering and promoting energy production and energy exploration before the fact and not after the fact, with respect to meeting the energy needs of our nation.

Sunday, May 17, 2009
Harvest Oil & Gas/Saratoga Resources Creditors' Committee Appointed
The United States Trustee has appointed the members of the Official Committee of Unsecured Creditors in the Harvest Oil and Gas, LLC and Saratoga Resources, Inc. bankruptcy cases. The companies filed for bankruptcy protection on March 31st in the Western District of Louisiana bankruptcy court. The members of the Creditors' Committee are:

* XPLOR Energy Operating Company
* River Rental Tools, Inc.
* Quality Energy Services, Inc.
* Southern Flow Companies, Inc.
* Thru Tubing Systems, Inc.

Download copies of every document filed in these bankruptcy cases and the bankruptcy cases of over 550 other major corporations using netDockets. Sign up now for a free trial account and $100 of free research.
Posted by Randall Reese at 10:39 PM
Labels: appoint, bankrupt, chapter 11, committee, creditor, gas, harvest, official, oil, resources, saratoga, trustee, unsecured

netDockets Bankruptcy and Corporate Restructuring Blog: Harvest Oil & Gas/Saratoga Resources Creditors' Committee Appointed

Sunday, May 17, 2009

Marcellus Shale Production Companies are not R.J. Nabisco or selling Cigarettes.

Today, it came to my attention that some people outside of the energy industry don't understand how the supply and demand curve has really done a 180 since last summer.

In writing this, it was not my intention to overly criticize or engage deeply into politics...I am merely pleading for policy makers to possibly use common sense, do some research and look outside of your backyard (Pennsylvania), such is applicable also to you Mr. President (USA )- as many of you hopefully recall, that this week Russia, did not mince words regarding what they deemed to be an impending energy shortage that will have effects to the entire world and that such energy shortage, may likely lead to wars or military conflicts, yet Obama wants tax heavily on production, regardless of the fact that the United States is merely one reinvigorated economy away from again being ill prepared and without the necessary production resources to handle domestic energy supply and demand.

Yes, I too have a bad taste in my mouth from taking a 2nd mortgages out every time I had to fill up last summer and then hearing, “Exxon Mobile, record profits, “ etc, but the energy companies that are the gatekeepers to big energy- the independents, the small companies and the medium companies, need to be able to operate, in an industry that is not merely called ”exploration, “ haphazardly, because drilling and production often calls for speculation and is not always a given for being profitable. So again, my point is that taxation, should be done on production, but in a manner that is not grossly disproportional to the intended purpose of fairly taxing without causing an aggregate chilling effect. Because, Energy companies can choose another venue other than Pennsylvania’s Marcellus Shale for drilling that may be more profitable, due to the severance taxation liability that some are proposing, but the citizens of Pennsylvania who deserve and often, who are in need of the residual revenue of Marcellus Production deserve policy makers elected by them to consider policies and taxations under the totality of circumstances (benefit + burden = aggregate value & intended value), before Robbing Peter to Pay Paul and throwing some delusional number out to people in a recession, “$100 million dollars in generated production taxation , “ that is a speculative number, if production were to remain as projected, IF companies can main production, when other plays might then become cheaper to produce?

While, I don't pretend to know a significant amount regarding Pennsylvania Politics...I do know an abundance about the State of Pennsylvania and the great people that make up, one of my favorite places...they deserve, rational and contemplated taxation polices that will not have chilling effects, due to those whom are proposing such taxation not understanding the present state of the industry they desire to seek 100 million dollars from, which, in theory is a great number that would be useful, but in reality, arguably such taxation would induce losing more than would be gained, in terms of aggregate loses (jobs, production decreasing or stagnating, etc).

So here we go, this article stemmed from my receiving this article today. An insert (full article blog article enclosed below) , from Inside Harrisburg - insight and perspective from The Morning Call's state house reporter John L. Micek...regarding severe taxation on Marcellus Shale Production, makes me wonder how some Politicians arrive at their policy decisions and rationales? Horse shoes, darts or flipping a coin?

Case and point... "He's also proposed a $100 million ''severance'' tax on the natural gas extracted from the Marcellus Shale deposits in northeastern Pennsylvania.

Republicans have balked at the severance tax, arguing that it will strangle a fledgling industry that could pump untold billions into the state's economy if it's given the proper incentives. But Rendell has said the state would be making a major mistake if it didn't capitalize on a rich, new stream of revenue.

The Democratic governor also wants to impose new levies on cigars and smokeless tobacco and a 10-cent increase to the state's cigarette tax, raising a total of $100 million."

I will not attempt a lengthy and articulated tirade regarding Pennsylvania Politics, with respect the enclosed, as my knowledge and capacity of the Politics in the Great State of Pennsylvania are remedial at best and such efforts would be disingenuous. With that being said, the blog article, with respect to propositions of extreme severance Taxation on Marcellus Shale Production, is not about Democrats or Republicans, it's about ignorance.

Politics aside, it comes down to economics, if that ridiculous and punitive severance tax is passed, it will having a chilling effect that will negate revenue that would have been generated, by any reasonably proposed severance tax. Apparently, these same people proposing to tax Marcellus Shale production at an alarming figure, believe such is akin to taxation of liquor or tobacco? Do they realize that there is another abundant Play available for energy production over in Louisiana in the Haynesville Shale, minus some the production cost associated with drilling in Pennsylvania? Moreover, many companies are selling their ready to produce mineral interest due to present market demand for natural gas driving prices below profitable drilling endeavors.

Ok, so rather than to induce production during extremely low exploration efforts, in which many companies are waiting/stalling or slow to produce (producing at minimal levels when production must occur), why not propose an outrageous severance tax on production...to eliminates jobs, cause Joe & Jane Mineral Holder to have to wait for another day, another year, etc to see their mailbox money, because drilling became too expensive, on top of which the net gain in raising such a disproportionate tax will be less than which would be generated by a reasonable tax when considering the macro effects of such tax, i.e., the chilling effect quashes or diminishes new production and/or impedes the stability for maintaining current production. Moreover, if such a disproportionate severance tax were to occur, it would not just make the Haynesville Shale a more attractive alternative producing venue, it would also push focus to other production plays such as the less risky, Barnett Shale that has a much more proven track record, with accessible data, via companies selling mineral interests, acreage that is still available for lease or from leases that were not 3/2 (3 year with a 2 year option) that are expiring. Point being, yes, eventually, regardless of the severance tax, Marcellus will be eventually produced, but to many in Pennsylvania now is a sense a of urgency for needing their piece of the pie of Marcellus Shale production during these anomaly economic times.

An important note, regarding some of the dialog by Pennsylvania Policy Makers that was the impetus for my writing this blog.

Energy Production is not comparable to tobacco commerce, Energy Production is meshed in our National Security and it insulates the threads of prosperity through fueling commerce. Without steady and affordable energy, national security and commerce are at risk or diminished, so let’s not compare tobacco to energy production or alcohol either, because, while a cold beer is up there on my list of earthly nirvana, it is not the fuel that feeds our country's stability. Using any rationalization of energy production taxation in the same paragraph as justification of Alcohol or Tobacco Taxation is inexplicably irresponsible.

All of us, recall last summer when paid extravagant gasoline prices and soon after, big energy announced record profits, not all of the producers are Exxon Mobile and these same producers who are Partners with Pennsylvania to produce & share fair profits would lose money to produce under a punitive severance tax in Pennsylvania, when other producing areas, without such taxes are begging for more production.

Again, something of something is better than something of nothing or as they say in Texas, "the pig eats, but the hog gets slaughtered"...fair and balanced taxation to foster growth, heck why not, Pennsylvania deserves it, but fair, not irrational exuberance (to borrow a quote from Mr. Greenspan) , so in order to maintain revenue streams, foster growth, because the other alternative is a diminished return, when production stagnates, and/or decreases and possibly is moved out of Pennsylvania...don't treat production companies like they are cigarette companies, make them pay their fair share as Pennsylvania is deserving, but don’t lose sight of the fact that in the big picture of a supply and demand dictated business operation, the relationship is a synergy, symbiotic for lack of a better word, they have to thrive in order for the partnership to work.

The full article blog and article cited from is enclosed below.

Thank you for reading this and I look forward to any and all who agree or disagree with my opinion(s) to expound on this discussion, as it is an important topic. As, I have had the pleasure of meeting so many nice people while working and staying in Pennsylvania, regardless of perspectives or views, it is generally enriching, as Penn Pride is never a supply and demand issue, regardless of the economy.

Thank you and God Bless,

-F. Sam Tallis, J.D.

Enclosed cited source and full article:

May 17, 2009

Your Handy State Budget Primer.

Total People in Discussion: 0

Categories: Current Affairs

Here's Everything You Need To Know ...
... about this year's budget debate, but were maybe afraid to ask.

Q: What's going on now?

The majority-Republican Senate and Democrat Gov. Ed and the Democrat-majority state House each has its own competing budget proposals.

The Senate drew first blood May 6 as it voted along party lines to approve a $27.3 billion, no tax-increase budget that makes deep cuts across state government. The Senate GOP plan is nearly $1 billion less than the current approved spending of about $28 billion.

Rendell and the majority-Democrat House are pursuing a $28.9 billion budget plan.

Rendell's budget plan also calls for spending cuts that would include shuttering the state library in Harrisburg and eliminating funding for public television.

Though deep, Rendell's cuts, as proposed, are less biting than those put forward by the Senate GOP.

But he's got adjustments to make because revenues have fallen since he unveiled his plan.

Democrats say the state needs to bolster services like education and job training as Rendell proposes in his budget. GOP leaders make the counter-claim that the state has no choice but to tighten its belt during an economic downturn.

''Passing a budget that focuses on the core needs of government is the right direction to go,'' said House Minority Leader Sam Smith, R-Jefferson.

The House Appropriations Committee is set to hold hearings this week on the Senate GOP budget plan. The Democratic version is also currently before the committee.

The divergence between the camps reflects the fundamentally different ways in which each side views the world.

Rendell and the Democrats say the state needs to spend more money if it expects to spark an economic turnaround. Republicans are urging fiscal caution, and say the state shouldn't spend more money than it has.

Q: So there's a deficit, right?

This is one of those things that both sides agree on. Courtesy of the cratering national economy, state revenues all over the country have taken it on the chin this year.

Through the end of April, the Pennsylvania Department of Revenue said it had collected $21.7 billion in taxes. That's $2.6 billion, or 10.5 percent, less than state officials had projected.

That total includes, among other things, corporate taxes, personal income taxes, sales taxes and the realty-transfer tax that's imposed when someone sells a house.

The overall state budget deficit has been something of a moving target. When Rendell rolled out his budget in early February, administration officials were anticipating a $2.3 billion gap.

That grew to $2.6 billion. And current projections by the House and Senate now show that the state will finish the year $3 billion in the red.

''That's $700 million more than the governor accounted for in his proposal and $400 million more than the four caucuses calculated in March,'' said Johnna Pro, a spokeswoman for House Appropriations Committee Chairman Dwight Evans, D-Philadelphia.

Rendell's spokesman, Chuck Ardo, said the administration is ''not arguing about the potential for a larger deficit than we had originally anticipated.''


Q: Does the budget have to be balanced?

Unlike their colleagues on Capitol Hill, where deficit spending is as natural as breathing, the Pennsylvania Constitution expressly forbids lawmakers from going into the red and staying there. Here's the applicable chapter and verse from Article VIII, Section 13(a): ''Operating budget appropriations made by the General Assembly shall not exceed the actual and estimated revenues and surpluses available in the same fiscal year.''

That artful, but brief, bit of verbiage was intended to encourage fiscal discipline on the part of policymakers, said Matthew Brouillette, the president of the Commonwealth Foundation, a free market-favoring think-tank in Harrisburg.

''Basically, it's because the state can't print money,'' he said. ''We can borrow money. But we already have $110 billion in state and local debt. That's $9,000 for every man, woman and child.''

Q: If there's a $3 billion hole, how will they fill it?

The budget plans proffered by Rendell and Senate Republicans each rely on $2.6 billion to $2.7 billion in federal stimulus money to help close the budget gap.

But that's where the commonality stops.

Republicans aren't interested in any new tax hikes, arguing the state shouldn't be making things harder for workers and businesses during economic tough times.

''This is an appropriate plan that matches the revenues we have this year and the challenges we can expect next year,'' Senate Majority Leader Dominic Pileggi, R-Delaware, said in a recent interview.

Rendell has also proposed tapping the state's $750 million Rainy Day Fund savings account for $250 million in 2008-2009, and then $375 million in 2009-2010.

He's also proposed a $100 million ''severance'' tax on the natural gas extracted from the Marcellus Shale deposits in northeastern Pennsylvania.

Republicans have balked at the severance tax, arguing that it will strangle a fledgling industry that could pump untold billions into the state's economy if it's given the proper incentives. But Rendell has said the state would be making a major mistake if it didn't capitalize on a rich, new stream of revenue.

The Democratic governor also wants to impose new levies on cigars and smokeless tobacco and a 10-cent increase to the state's cigarette tax, raising a total of $100 million.

Q: What if there's no deal by June 30?

That one's pretty simple. The state loses the authorization to spend money. Unlike Congress, state lawmakers can't pass ''continuing resolutions'' to keep the cash flowing, Brouillette said.

This week, Rendell sent an e-mail to 80,000 state workers, telling them they'll go without pay in the event of a budget impasse, but should continue to go to work.

No budget has been passed on time in the nearly seven years Rendell has been in office. The state went through its longest impasse under Rendell in 2003 when lawmakers and the administration did not come to agreement on the budget's final components until just before Christmas that year.

And despite what you may have heard, there is no "constitutional" deadline to approve a new budget by June 30.

The language is actually etched in statute, which lawmakers are free to change if they want to, Brouillette observed.