Restructuring FAQ

On April 17, 2017, Venoco, LLC and its affiliates (TexCal Energy (LP) LLC; Whittier Pipeline Corporation; TexCal Energy (GP) LLC; Ellwood Pipeline, Inc.; and TexCal Energy South Texas, L.P. (collectively, “Venoco”) announced that it has filed for bankruptcy under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware.

 

Q:        Why is Venoco filing for Chapter 11 bankruptcy?

Venoco is filing for bankruptcy due to a number of circumstances, including the prolonged closure of Plains All American Pipeline’s Line 901, which shut in more than 50% of Venoco’s production for the last two years and for which the restart date is uncertain.

Q:        Will Venoco maintain operations?

As it pursues the sale and disposition of its assets, Venoco expects to conduct business as usual for remaining operations, including maintaining existing relationships with vendors, contractors and employees.

Q:        Will Venoco be forced to lay off employees?

Venoco expects to conduct business as usual for its remaining operations as it pursues the sale and disposition of its assets through the Chapter 11 process, including maintaining existing relationships with employees.  Regretfully, all employees will ultimately lose their jobs with Venoco as part of the sale and wind-down of our assets, although we are hopeful that many employees will be hired by the purchasers of our assets.

Q:        What will happen to Venoco’s assets?

Venoco’s assets are expected to be sold or wound down through the bankruptcy process, unlike the 2016 restructuring aimed at bolstering the company’s financial position.  Sales will be completed through a court-approved transfer process that includes a safe transition of operational responsibility.  For any unsold assets, a court-approved process will be followed for a safe transition of operational responsibility to the relevant regulatory agencies or any third party that they may designate.

Q:        What will happen to the South Ellwood Field assets, including Platform Holly? 

Prior to bankruptcy, Venoco quitclaimed its leases in the South Ellwood Field back to the state.  The leased areas now become part of the state Marine Sanctuary, subject to decisions by California’s elected officials. The state and prior operators will be responsible for the decommissioning process of Platform Holly and related infrastructure under California law.

Venoco and the State Lands Commission have executed a Reimbursement of Temporary Services Agreement for Venoco to maintain the South Ellwood Field assets until the state designates another operator responsible for managing the safety and security of the assets throughout the formal decommissioning process.

Q:        Will there be increased seeps due to the end of production of the South Ellwood Field?

Potentially – research has shown that increased production decreases the pressure in the South Ellwood field.  Ending production may correspondingly increase natural seeps of methane and oil into the marine environment.  The remaining stakeholders will be considering these potential risks in evaluating how best to move forward.

Q:        What will happen to the Ellwood Onshore Facility in Goleta?

Venoco expects the Ellwood Onshore Facility will be used for any activities associated with decommissioning Platform Holly.  It otherwise is expected to be treated as an asset for disposition through the bankruptcy process.

Q:        What will happen to the Federal platforms/leases?

Venoco expects to continue production at its federal platforms/leases as it pursues the sale or disposition of its assets through the court-supervised Chapter 11 process.

Q:        What will happen to the Ellwood Marine Terminal?

The Ellwood Marine Terminal has not been active for years.  It is currently being decommissioned.  Under California law and the relevant commercial agreements, prior operators are expected to assume the obligation to continue the decommissioning process with Venoco’s filing under Chapter 11.

Q:        What will happen to the production in Beverly Hills?

Production at the Beverly Hills facility stopped at the end of 2016 when the leases terminated.  Venoco is meeting with the City of Beverly Hills and the Beverly Hills Unified School District this week to address a long-term plan for the safe transition of responsibilities at the site.

Q:        What about Venoco’s legal claims against Plains All American?

Venoco expects to maintain and continue to pursue its claims against Plains All American regardless of the bankruptcy filing.

 

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