Dr Ricky, here's the latest
your friend, Tayliar
By: glplan
15 May 2006, 10:59 AM EDT
Msg. 79999 of 80013
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HAPPY READING!
Have premission to provide this update to everuyone:
Jim Norman
Platt's Oilgram, Cpyright 2006
Volume 84,Number 87,
May 8, 2006
US JUDGE CLEARS WAY FOR LIQUIDATION OF KAZAKH LEASEHOLDER AIPC
New York-A Louisiana federal bankruptcy judge last week cleared the way for liquidating the remains of loss-plagued Kazak E&P player American International Petroleum Corporation, giving shareholders the right to go after former insiders and partner firms with a raft of lawsuits.
Judge Gerald Schiff May 1 ordered a final Chapter 11 liquidation plan drawn up, including a list of possible legal actions proposed by an equity committee formed by disgruntled shareholders soon after APIC's October 2004 bankruptcy filing.
Among the possible targets of shareholder recovery suits, according to a committee filing, is Kazak-based Bridge Hydrocarbons, which gained 85% control of AIPC's main Kazakh concession less than a year before the bankruptcy on what shareholders claim were sweetheart terms.
Platts has learned a key owner of Bridge, before his mysterious death in a "hunting accident," was Yerzhan Tatishev, the 37-year-old chairman of Kazakhstan's second-ranked Bank TuranAlem. BTA also gave a $50 million credit line to Caspian Gas Corporation, an Almaty venture set up by Bridge and AIPC to own and operate the huge, undeveloped Shagyrly-Shomyshty natural gas field on the concession, License 1551. Attempts to contact Bridge were unsuccessful.
A Ryder Scott report has put "technically proved" shallow gas reserves at License 1551 at more than 600 Bcf, but news stories claim more than 1 Tcf.
AIPC, which had racked up $165 million in losses since its founding in 1982, was an unlikely contender for the tract. But after agreeing to $2 million in "consulting fees" for Kazakh intermediary Maxim Tolokonnikov in 1999, AIPC won a 30-year license for that 264,000-acre field and the 58 successful 1960s delineation wells drilled there by the Soviets, according to AIPC filings.
Founded by Lebanese-born Purdue engineering PhD George Faris, AIPC never produced any oil or gas to speak of, but always seemed to find funding mainly from unregistered offshore debenture deals. according to company filings with the US Securities and Exchange Commission. It had pretensions of being an integrated international oil producer and for a time until 1999 its board included former US ambassador to Saudi Arabia Richard Murphy. He was replaced by ex-US Finland and Lebanon ambassador John Kelly, now a creditor for unpaid director fees and a possible target with other directors and managers of the shareholder claims, court records show.
Strapped for cash in 2003, AIPC said it could find no other partners and sold 85% of the license for just $5 million and a "carry" on its remaining 15% to Bridge in early 2004.
In addition to Tatishev, Platts learned another director of Bridge is former Kazakh power ministry head and ex-opposition party leader Mukhtar Ablyazov, now Tatishev's successor as chairman of BTA. BTA confirmed to Platts Ablyazov went on the board there recently but "has never been a shareholder" in Bridge or Caspian Gas.
Similar deal
The AIPC-Bridge deal appears similar to Tatishev's arrangement, through British Virgin Islands entity Bramex Management, to get a stake in another small Kazakh E&P independent, TransMeridian Exploration, according to SEC filings. BTA also was the main lender to Houston-based TransMeridian's Kazakh unit (ON 5/3/05).
Headed by former AIPC Chief Operating Officer Lorrie Olivier, TransMeridian disclosed it let Bramex buy a 50% equity stake worth 35 million barrels in its South Alibek oil field for just $15 million in early 2004, within weeks of the AIPC/Bridge deal. TransMeridian has since taken on heavy debt to buy back that interest from Tatishev's family for $168 million last October. Last year it lost $21.6 million on revenues of $8.4 million, producing 1,100 b/d, securities filings show.
Tatishev had been reported to own from 20% to 60% of BTA, which has spread in recent years into Ukraine, Azerbaijan and other Central Asian venues. Tatishev was shot in the back of the head while driving his own Jeep on a hunting trip in December 2004. While reaching for a loaded rifle, the security-conscious marksman, known to always use a driver, reportedly hit a bump and the gun went off.
Ablyazov, 45, had an ambiguous relationship with Tatishev, who was one of the early backers of Kazakhstan's Democratic Choice opposition political party formed in late 2001 by Ablyazov. Having been Kazakh minister of industry, economy and trade in 1998 and 1999, when License 1551 was up for grabs, Ablyazov also had amassed significant industrial, media and banking investments, including a large stake in BTA when it was privatized in 1997 through his Temirbank, according to published reports.
Within weeks of launching the now-disbanded party, however, Ablyazov was arrested by the government of strongman Nursultan Nazarbayev for alleged "abuse of power." He was promptly convicted and imprisoned. Tatishev left the party and appeared to distance himself from Ablyazov, press accounts show.
After a year in a remote prison, Ablyazov was pardoned by Nazarbayev, promising to stay out of politics. He reportedly moved to Moscow to set up an industrial firm but traveled often to Kazakhstan. Within six months of Tatishev's death, Ablyazov became chairman of BTA in mid-2005.
Though the Bridge deal was less than a year before AIPC filed for bankruptcy, and could have been unwound in Chapter 11, AIPC management made no move to take back its 85%. Nor did AIPC ever declare Bridge in default when it came up with only $15 million of a promised $50 million of working capital and a small fraction of the required $180 million of development funds, court records show. In fact, court testimony revealed Bridge used AIPC's own remaining 15% as collateral for the loan used to pay AIPC.
But the shareholder-dominated liquidation committee approved by Judge Schiff lists those as key claims to be pursued.
As part of its liquidation plan, AIPC has sold its remaining cost-free 15% of License 1551 for $16 million to another Kazakh firm registered in the British Virgin Islands, Polgraft Oil. Polgraft's unidentified owner, represented by BTA itself, also has taken a stake recently in Bridge, according to court testimony.
Judge Schiff approved that sale after a January 30 hearing when AIPC manager Denis Fitzpatrick testified there were no other likely buyers. With $150 million of spending needed on more wells and a pipeline to handle a planned 200,000 Mcf/d, Fitzpatrick claimed it would be 2011 before AIPC saw any cash from License 1551.
Proceeds from that sale will pay AIPC's only remaining secured debt, $12 million owed an Atlanta-based Bermuda hedge fund Global Capital Advisors. That clears the way for the equity committee to pursue claims.
Fitzpatrick, AIPC's former chief financial officer, has remained an outside consultant to AIPC. He would make a $500,000 fee on the Polgraft deal, but could also be targeted in the shareholder lawsuits.
He is the one who arranged the sale of AIPC's other main asset last year: a 30,000 b/d asphalt and military jet-fuel refinery near Lake Charles, Louisiana. The buyer, for $9 million, was Pelican Refining, formed by ex-Coastal chairman Oscar Wyatt and Bayoil (USA) head David Chalmers (ON 1/10/05). Both Wyatt and Chalmers are now under federal indictment in New York for allegedly paying surcharge kickbacks to the Saddam Hussein regime on Iraqi crude purchases under the UN Oil-For-Food program (ON 10/24/05). Both have pleaded not guilty and await trial.
CEO of Caspian Gas is former Union Texas Petroleum international vice president James Knight, who did not respond to a request for comment. Knight also was CEO for two years of private Houston-based Kazakh independent First International Oil Corporation before hiring on as president at AIPC in September 2001 (ON 10/27/97). Loss-ridden FIOC was later sold to Chinese oil major Sinopec in 2004 (ON 6/30/05).
Knight moved up to succeed Faris as CEO in mid-2002 and became "acting chairman" when Faris exited in October 2002. Also leaving as a long-time AIPC director then was former Arab Gulf shipping tycoon Donald Rynne.
AIPC announced Knight's resignation in February 2004 "to pursue other interests," without revealing he would head affiliate Caspian Gas.
Another Kazakh block
Bridge was not the first curious Kazakh deal for AIPC. Under Faris, AIPC had dabbled in money-losing oil ventures from Peru and Columbia to Indonesia and Russia. But AIPC gained prominence in 1997 when, after selling its Peru and Colombia interests, it landed a seemingly phenomenal stake in another Kazakh concession with purported billions of barrels in potential reserves on 4.7 million acres immediately south of License 1551.
Faris got that by swapping 10% of AIPC's nearly worthless stock and $400,000 to Frankfurt-based MED Shipping & Trading, headed by Spiridon Armenis, for a 70% stake in the License 953 operating company, MED Shipping Usturt Petroleum (MSUP). "Honorary chairman" of MED S&T was Bulat Nazarbayev, half-brother of the Kazakh president.
Within weeks, AIPC stock rocketed 30-fold to more than $7/share (ON 8/15/97). Former partner Stefan Grossman said both Armenis and Bulat Nazarbayev profited.
Barely a year later AIPC was back in penny-stock range. After two non-commercial wells and some seismic shoots, MSUP defaulted on its License 953 obligations despite two extensions. Since 2004, the Kazakh government has treated License 953 "as forfeited," AIPC says, though stockholder dissidents say they hope to get it reinstated.
AIPC's Faris and Rynne also profited from the MSUP deal. A securities filing shows they doubled their stock holdings to 10% of AIPC at $0.25/share by buying convertible debentures on the very day AIPC made the downpayment on MSUP, but before it was disclosed. Faris later told Platts the purchase was several days earlier when he had no idea the deal would close, and attributed the discrepancy in the filing to a clerical error.-James Norman
© Copyright Platts 2006
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