Energy Partners reported it was recently informed by the Minerals Management Service (MMS) that it had regained supplemental waiver status. This significant development means that the Company, due to its strong financial condition, no longer has to post surety bonds in support of decommissioning obligations associated with certain of its federal offshore Gulf of Mexico (GOM) leases.
The Company anticipates that cash held as collateral for surety bonds supporting these obligations will be released during the second quarter of this year. This cash collateral totals approximately $5.5 million. The Company also reported it has the potential to realize the release of an additional $3.3 million of cash posted as collateral for other surety bonding obligations. The cash collateral totaling $8.8 million associated with surety bonds is currently reflected as restricted cash on the Company' balance sheet, where it will remain until its release.
Gary C. Hanna, the Company's CEO, stated, "This exciting development has brought closure to an event that occurred because of the Company's distressed financial condition prior to our recent 2009 reorganization. The MMS has reviewed the positive effects of this reorganization on our balance sheet as of the end of last year, and restored our supplemental waiver status. This will drop straight to the bottom line through premium savings of well over a million dollars per year for those surety bonds that we are in the process of canceling. Additionally, with the anticipated release of $5.5 million of cash collateral, these dollars will no longer be reflected as restricted cash on our balance sheet. Due to our strong cash flow, increased liquidity and net debt of less than $30 million, we also believe that our current financial position can be expected to lead to the release of another $3.3 million of cash collateral currently being held in support of other surety bonds that will remain in place in the ordinary course of business. We expect the cash collateral will be released during this quarter and that these dollars will provide us with additional liquidity."
Most Popular Articles
From the Career Center
Jobs that may interest you