Companies try to recoup losses from Elm Ridge failure
AZTEC — A hearing for a number of lawsuits against Elm Ridge Exploration Co. was held Monday at the Eleventh Judicial District Court in Aztec, as companies try to recover money owed but not paid as the oil and gas industry went into a bust cycle.
Judge Bradford J. Dalley presided.
The hearing pertained to an application for a writ of garnishment that was filed on ARM Energy, a company that helps oil producers manage assets and risk. ARM purchased petroleum at well heads from Elm Ridge, and then paid smaller companies to process it. Proceeds of the garnishments would help defer some of the losses — totaling more than $2.3 million according to Daily Times archives — claimed by plaintiffs representing the smaller companies.
Several of the plaintiffs were represented by attorney Richard Tully, who said today that they’re seeking 100 percent of the garnishment proceeds.
But other groups also claimed losses and an argument arose as to who owned the petroleum products, Elm Ridge or its main investor, Freepoint Commodities.
Tully argued that Freepoint owned the hydrocarbons up to the point of delivery, and then the title of ownership transferred to Elm Ridge as the product went to the smaller companies for further processing. He speculated that the investment firm didn’t want to get involved in marketing and distribution of the petroleum, so it gave ownership to Elm Ridge at that point.
“The debtor is Elm Ridge, not Freepoint, and those are the funds we’re seeking to garnish,” said Tully. “These plaintiffs are small family-owned businesses and they’re dramatically impacted by Elm Ridge’s failure to pay, and now there’s a big company coming in saying they’re entitled to the proceeds.”
Paul Fish, attorney for Freepoint, denied that the company is trying to corner funds owed to the plaintiffs, saying that his client was also financially harmed by the failure of Elm Ridge.
“I think anyone in the oil and gas business who didn’t sell out in 2013 made a bad decision, because hard times were coming,” Fish told the judge. “There was no intent to hurt anyone, it just happened with the boom and then the bust. No one’s getting rich here.”
Dalley said he would take the matter under advisement, and asked both parties to submit findings and conclusions by Nov. 23.
Leigh Black Irvin is the business editor for The Daily Times. She can be reached at 505-436-0853.