Few U.S. oil and gas firms return small-business COVID-19 loans

Battalion Oil

19/05/2020 12:00

By David French
    NEW YORK, May 19 (Reuters) - U.S. securities filings show
that only three of 12 listed oil and gas companies that received
emergency government aid made available for small businesses
said they would return it ahead of a deadline for firms that do
not need the funds to do so. 
    The U.S. Treasury Department offered amnesty to public
companies that return money they borrowed by May 18, saying it
would deem they made the application in good faith due to
economic uncertainty fueled by the coronavirus outbreak, before
guidelines were clarified.
    The country's energy sector has been clamoring for
government aid in the wake of plummeting oil prices that have
driven several debt-laden exploration and production companies
into bankruptcy.
    While President Donald Trump said last month his
administration would formulate a plan to help the oil and gas
industry, no specific aid has been announced. This has left
energy companies to seek relief under the broader $2.3 trillion
U.S. stimulus package.
    One aspect of the latter that has been used by oil and gas
firms is the so-called Paycheck Protection Program (PPP) for
small businesses, providing loans that can be forgiven to cover
payroll expenses, as well as mortgage interest, rent and utility
costs.
    Denver-based exploration and production company PDC Energy
Inc  PDCE.O , which has a market capitalization of $1.3 billion,
said on May 8 it had returned its $10 million PPP loan.
    Natural Gas Services Group  NGS.N  also returned its $4.6
million PPP loan. Its chief executive, Stephen Taylor, said the
Midland, Texas-based compression equipment provider had to cut
20% of its workforce after it returned the funds.
    Public companies and their employees were being
"discriminated against" by a "politically driven process",
Taylor told analysts during the company's first-quarter earnings
call on May 7.
    Dawson Geophysical Co  DWSN.O  returned its $6.4 million PPP
loan last week, the company said in a May 14 filing.
Midland-based Dawson, which produces seismic data for oil and
gas firms, cited "an abundance of caution" and new guidance for
the decision.  urn:newsml:reuters.com:*:nFWN2CW1EG
    Among those receiving loans, but which had not disclosed
whether they would return the funds as of Monday, included
Calumet Specialty Products  CLMT.O . The Indianapolis-based
refiner received $31.4 million through five PPP applications.
    Exploration firms Amplify Energy Corp  AMPY.N  and Battalion
Oil Corp  BATL.A  received $5.5 million and $2.2 million
respectively. Houston-based onshore driller Independence
Contract Drilling  ICD.N  gained a $10 million PPP loan.
    The quartet, along with the other five listed oil and gas
firms that received PPP loans, did not respond to requests for
comment.
    Energy companies have also benefited from emergency tax
reform enacted in the wake of the pandemic.
    More than $2 billion of benefits were recorded by a combined
43 companies due to two changes in the tax code, including one
allowing current losses to be offset against past income tax
bills, a Reuters review of first-quarter earnings statements
found. 

 (Reporting by David French in New York; Editing by Greg
Roumeliotis and Kenneth Maxwell)
 ((davidj.french@thomsonreuters.com; +1 646 223 5211; Reuters
Messaging: davidj.french.thomsonreuters.com@reuters.net))