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Posts Tagged ‘W&T offshore’

Cox legacy operations are GoA violations leaders. Will the lessons from past bankruptcies ever be learned?

Posted in accidents, California, decommissioning, energy policy, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , , , , , , on July 29, 2025| 1 Comment »

Background: On February 12, 2024, the bankruptcy court approved the sale of certain Cox Operating assets to Natural Resources Worldwide LLC (NRW), a company that “does not mine, drill, or produce minerals, has no operations, and conducts business solely in an office environment.”

NRW contracted with Array Petroleum to operate the former Cox Assets. Array subsequently sued NRW, asserting that NRW received $78,000,000 in revenue, but disbursed only about $48,000,000 to pay Array’s invoices and those of the subcontractor.

The court filing claimed that NRW failed to pay Array $2.5 million, the subcontractors $10.7 million, and the United States $12 million. A large share of the subcontractor costs were probably for well operations given that 21 Array workover applications were approved in 2024 and 2025. The $12 million due to the Federal government is reportedly for royalty payments. Were any revenues set aside for decommissioning liabilities?

Array’s lawsuit was dismissed by the court on January 3, 2025, after a joint motion to dismiss was filed by the defendants. Information on the reasons for the dismissal is not publicly available.

Old platforms: According to BOEM records, Array operates 154 platforms previously owned by Cox. These platforms are in the Ship Shoal, South Marsh Island, and West Delta areas of the Gulf of America. Most are >30 years old and four are more than 70 years old (see chart below). 41 are classified as major structures including 15 of the 26 platforms installed in the 1950s and 1960s. 44 are manned on a 24 hour basis. 79 have helidecks. Massive decommissioning liabilities loom.

Violations: NRW/Array ranks 37th out of 42 companies in GoA oil production (2025 YTD) and 36th out of 42 companies in gas production, but leads the pack in Incidents of Noncompliance (INCs):

  • Array accounted for nearly half of all GoA INCs issued in the first half of 2025 (chart below).
  • Array was issued 9 times more warning INCs (311) than any other operator. Apache was second with 34.
  • Array had more component shut-in INCS (46) than any other operator. W&T, another operator of Cox legacy platforms, was second with 32.
  • Array had more facility shut-in INCs (6) than any other operator. W&T was again second with 5.
  • Array averaged 2.0 INCs/facility inspection vs. a combined average of 0.3 INCs/facility inspection for all other operators.
violation typewarningscomponent shut-insfacility shut-ins
Array311466
all others21116449

Lessons that should have been learned from the Cox, Fieldwood, Black Elk, Signal Hill, and other bankruptcies dating back to the Alliance Operating Corp. failure in 1989:

  • There are many small and mid-sized companies that are responsible operators. Their participation in the OCS program should be encouraged. However, others have demonstrated, by their inattention to financial and safety requirements, that they are not fit to operate OCS facilities.
  • The growth of Fieldwood, Cox, Signal Hill, and Black Elk was in part facilitated by lax lease assignment and financial assurance policies. 
  • Operating companies should have to demonstrate that they can operate safety and comply with the regulations before they are approved to acquire more properties.
  • Despite ample evidence of the importance of compliance and safety performance in determining the need for supplemental financial assurance, BOEM’s 2024 rule dropped all consideration of these factors.,
  • Expect the ultimate public cost of the Cox bankruptcy, in terms of decommissioning liabilities and the need for increased oversight, to be large.
  • The Federal govt (Justice/Interior) should strongly oppose bankruptcy court asset sales that increase public financial, safety, and environmental risks.

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2024 Gulf of America compliance data and the Cox bankruptcy

Posted in Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , on April 2, 2025| Leave a Comment »

In June 2023, Cox and affiliates operated 435 platforms in the Gulf. That number is now only 46, all of which are on relinquished or terminated leases.

Cox Operating LLC and affiliates were once again the violations leaders in 2024 accounting for 50% (479/957) of the warnings, 12% (47/398) of the component shut-ins, and 7.3% (8/109) of the facility shut-ins.

All but 3 of the Cox enforcement actions were during the first half of the year. This is presumably because of the termination of Cox operations and the ongoing divestiture of their assets.

According to BOEM’s platform data base, Cox (43) and affiliates Energy XXI (3) and EPL (0) now operate only 46 platforms. This is a big decline from Sept. 2024 and June 2023 when the Cox companies operated 243 and 435 platforms respectively. All of the remaining Cox platforms are non-producing and are on relinquished or terminated leases.

The curtailment of Cox operations is no doubt an important factor in the sharp decline in Gulf of America violations in the second half of 2024. Per the data below, total GoA wide violations declined by 58% (1031 vs. 433) in the second half of 2024 as Cox violations essentially disappeared:

Gulf of America
inspection data		warningscomponent
shut-ins		facility
shut-ins		facility
inspections
first half 2024725243631586
2nd half 2024232155461546
reduction493 (68%)88 (36%)17 (27%)40 (2.5%)

Cox companies inspection datawarningscomponent
shut-ins		facility
shut-ins		facility inspections
first half 2024478467 404
2nd half 2024111174

Some Cox assets have been acquired by W&T and Natural Resources Worldwide. BOEM records indicate that 8 record title assignments and 3 operating rights assignments from Cox to W&T were approved in the first half of 2024. W&T currently operates 116 platforms, but it’s unclear how many are former Cox facilities.

The acquisition of Cox properties does not appear to have significantly affected W&T 2024 inspection results, which were respectable:

W&T insp. datawarningscomponent
shut-ins		facility
shut-ins		facility
inspections
first half 20241231083
2nd half 202417142105

Additional record title and operating rights assignments to Natural Resources Worldwide (NRW) were approved in 2025, but NRW does not appear to be operating any platforms.

Ironically, NRW was cited for 1 warning and 1 facility shut-in without a single inspection. Presumably, these violations were the result of administrative issues.

Online data are insufficient to account for the 435 platforms that were on the Cox ledger in June 2023 or determine the remaining decommissioning liabilities. Per the platform database, no Cox, Energy XXI, or EPL platforms were removed in 2023, 2024, or 2025.

On a more positive note, most GoA operators had good safety and compliance records in 2024. One major producer had a historically significant record. More on that to follow.

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Cox bankruptcy update

Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, tagged , , , , , , , , , on September 18, 2024| Leave a Comment »

The previously discussed sale of Cox assets in 6 GoM fields to W&T was completed in January for $72 million, $16.5 million less than the proposed price. W&T, an established GoM operator, believes they can increase the pre-bankruptcy production (8300 boepd) through workovers, recompletions, and facility repairs.

The extent to which W&T is assuming decommissioning liability for the Cox assets is unclear to this observer. Decommissioning information from W&T’s SEC filing is pasted at the end of this post.

In February, Cox won court approval to sell “about a dozen oil fields to Natural Resources Worldwide LLC for about $20 million following a bankruptcy court auction.” This sale is more concerning given that the purchaser has no operating history in the GoM, and scant information about the company can be found online. Perhaps they are affiliated with Natural Resources Partners L.P., an energy investment firm which “owns mineral interests and other rights that are leased to companies engaged in the extraction of minerals,” but “does not mine, drill, or produce minerals, has no operations, and conducts business solely in an office environment.”

Per BOEM data, Cox filed requests to assign a number of leases to Natural Resources Worldwide (NRW) in May, but those requests have yet to be approved. Hopefully, BOEM is taking a hard look at these requests and their obligations following the court auction. Decommissioning liabilities should be their number one concern. (Note: NRW was just listed as the operator of the former Cox platform at EI 361, so presumably at least some of those assignments have now been approved.)

According to BOEM’s platform data base, Cox and affiliates Energy XXI and EPL still operate 243 platforms, down from 435 in June 2023. Also per the data base, the Cox companies have not removed any platforms during 2023 or 2024 YTD, so the reduction in platforms is presumably the result of the W&T transaction. Most of the remaining Cox platforms are old – 16 of their 77 major platforms were installed in the 1950s!

Meanwhile, Cox and affiliates continue to be the GoM violations leader by far with 549 incidents of non-compliance (INCs) in 2024 YTD, 45% of the GoM total for all operators. No other company has more than 100 INCs (although Whitney Oil and Gas has a disappointing 93 INCs, including 33 facility shut-ins on only 65 inspections!)

operatorplatforms/
major platforms		warning INCscomponent shut-in INCsfacility shut-in INCs
Cox209/69407444
Energy XXI19/77312
EPL5/11611
Total Cox233/77496467
Total GoM1519/73683131768
INCs are for 2024 as of 9/17/2024. A major platform has at least 6 well completions or more than 2 pieces of production equipment.

From W&T’s quarterly SEC filing:

Contingent Decommissioning Obligations

The Company may be subject to retained liabilities with respect to certain divested property interests by operation of law. Certain counterparties in past divestiture transactions or third parties in existing leases that have filed for bankruptcy protection or undergone associated reorganizations may not be able to perform required abandonment obligations. Due to operation of law, the Company may be required to assume decommissioning obligations for those interests. The Company may be held jointly and severally liable for the decommissioning of various facilities and related wells. The Company no longer owns these assets, nor are they related to current operations.

During the three months ended March 31, 2024, the Company incurred $2.6 million in costs related to these decommissioning obligations and reassessed the existing decommissioning obligations, recording an additional $5.3 million. As of March 31, 2024, the remaining loss contingency recorded related to the anticipated decommissioning obligations was $20.8 million.

Although it is reasonably possible that the Company could receive state or federal decommissioning orders in the future or be notified of defaulting third parties in existing leases, the Company cannot predict with certainty, if, how or when such orders or notices will be resolved or estimate a possible loss or range of loss that may result from such orders. However, the Company could incur judgments, enter into settlements or revise the Company’s opinion regarding the outcome of certain notices or matters, and such developments could have a material adverse effect on the Company’s results of operations in the period in which the amounts are accrued and the Company’s cash flows in the period in which the amounts are paid. To the extent that the Company does incur costs associated with these properties in future periods, the Company intends to seek contribution from other parties that owned an interest in the facilities.

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Cox bankruptcy: Will decommissioning and safety issues be satisfactorily addressed?

Posted in decommissioning, Gulf of Mexico, Offshore Energy - General, Regulation, tagged , , , , , , on January 8, 2024| Leave a Comment »

Cox proposes to sell its Gulf of Mexico assets to W&T Offshore for $88.5 million. The bankruptcy case docket has 64 pages of linked documents including many objections to the terms of the sale.

The bankruptcy court’s priorities should be 1) minimizing safety and environmental risks and 2) protecting the public from the massive decommissioning liabilities.

Per the latest BOEM information, Cox and affiliates Energy XXI and EPL operate 477 platforms, which is 31% of the Gulf of Mexico total! (See the related information posted last June.) BSEE estimates that the decommissioning costs for these platforms will exceed $4.5 billion!

Per BSEE data, Cox and its affiliates were cited for 780 incidents of noncompliance (violations) in 2023. They thus accounted for 43% of all 2023 GoM INCs.

Questions:

  • How will taxpayers be protected from Cox’s $4.5+ billion decommissioning obligations?
  • What is the plan for both safely decommissioning facilities and operating those that remain?
  • Why was Cox allowed to continue expanding GoM operations without demonstrating financial assurance and operational competence?
  • Why did BOEM propose to eliminate consideration of a company’s compliance record in determining the need for supplemental financial assurance?
  • How was a failing operator (Cox) selected just 8 months ago for a Federally funded (DOE) project to repurpose GoM facilities for carbon sequestration purposes?

The Cox bankruptcy is yet another costly lesson for Federal regulators. Moving forward, decommissioning and lease assignment policies must prioritize safety, environmental protection, and protection of the public’s financial interests.

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Saluting the contrarian GoM producers: 11 operators are producing more nonassociated (gas-well gas) than associated (oil-well gas)

Posted in energy policy, gas, Gulf of Mexico, natural gas, Offshore Energy - General, tagged , , , , , , , , , , , , , on January 11, 2023| Leave a Comment »

Offshore gas has important environmental advantages, particularly nonassociated gas-well gas (GWG). While the GoM production chart (below) is not pretty, there are signs that gas production may have bottomed and is slowly rising. This is largely due to growth in oil-well gas (OWG) associated with deepwater oil production.

A successful offshore program requires a mix of strategies, and it is encouraging that companies are still pursuing natural gas on the GoM shelf. The second chart (below), based on BOEM data, shows 2022 YTD (probably through Oct.) GWG production for the 11 companies that (1) produced more GWG than OWG and (2) produced more than 1 BCF of GWG.

Interestingly, 100% of the gas produced by Contango, Samchully, and Helis in 2022 was from gas wells. Contrast this with bp, the third largest GoM gas producer. None of bp’s gas production was from gas wells.

One has to wonder about the extent to which deepwater gas reservoirs are being stranded due to the less favorable economics. Preventing such resource losses was once an important regulatory consideration given the conservation mandate in the OCS Lands Act and the importance of maximizing the public benefit. However, current policy, as expressed in the proposed 5 year leasing plan, is to phase out offshore production rather than sustain it. This is difficult to reconcile.

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