After years of compliance violations, oil spills, and state-imposed fines, HVI Cat Canyon filed for bankruptcy in the Southern District of New York U.S. Bankruptcy Court on July 25.
In the petition, the company’s president and chief operating officer, Alex Dimitrijevic, cites numerous factors contributing to the company’s moving into bankruptcy.
“The circumstances leading to the filing … are a reduction in revenues due to diminished oil and gas production and sales from [HVI Cat Canyon’s] assets compounded by overreaching penalty assessment and debt obligations including foreclosure proceedings … for asset sales,” the petition states.
The petition doesn’t cite the specific penalty assessments contributing to its financial troubles. However, last year the state ordered the company, formerly known as Greka Oil and Gas, to pay more than $12 million in fines. The California Department of Conservation’s Division of Oil, Gas, and Geothermal Resources (DOGGR) issued the fine about one year after serving the company with a stop-injection order because of its failure to comply with regulations at an oil field the company operates in Orange County.
Although the petition doesn’t identify the assets that are being foreclosed on due to the company’s debt obligations, it states that HVI defaulted on a loan from the London branch of UBS AG, an international investment bank, which resulted in a foreclosure and an upcoming sale of assets. According to the petition, the bank is the company’s largest creditor, with HVI owing the bank more than $114 million.
The filing comes about two weeks after some residents in Orcutt were notified that the mineral rights underneath their homes, previously owned by HVI Cat Canyon, are being sold at an auction in August. The notices state that the auction is being held to ensure UBS AG gets the compensation it’s entitled to as a collateral agent.
An attorney representing UBS AG in the bankruptcy proceedings declined to comment. Additionally, HVI Cat Canyon didn’t respond to a request for comment after the Sun reached out to the attorney representing the company in the proceedings.
HVI Cat Canyon’s troubles with compliance violations over the years have involved local, state, and federal jurisdictions. The Environmental Protection Agency served search warrants at the oil company’s facilities on Sinton Road in the Santa Maria Valley late last year. The U.S. government and state of California filed an ongoing lawsuit against the company in 2011, claiming it illegally spilled oil more than 20 times at its facilities between 2005 and 2010.
At a Santa Barbara County Board of Supervisors hearing in February this year, John Zorovich, deputy director of the county’s Energy, Minerals, and Compliance Division, said the majority of oil and gas compliance violations in the county are committed by HVI Cat Canyon.
According to the petition filed in July, the company has about 50 employees and operates oil fields in Santa Barbara, Kern, and Orange counties. Despite filing for bankruptcy, the company plans to continue operating, the petition states.
—Zac Ezzone
