Blast Energy contractor ordered to turn over assets in light of dispute settlement contempt

By Caroline Salls

Pittsburgh, June 20 - Blast Energy Services Inc. contractor Saddle Creek Energy Development LP had a receiver appointed to take control of its assets after being found in contempt of a court order approving an oil rig drilling dispute settlement, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

The court appointed Robin Marie Ziek as Saddle Creek's receiver.

According to the filing, the appointment of a receiver is necessary because Saddle Creek owes $682,550 to Blast Energy under the settlement to help fund Blast's plan of reorganization and because Saddle Creek chairman Charles Chandler Davis has abused the bankruptcy process and the mediation process.

Judge Jeff Bohm said Davis signed the mediation agreement that led to approval of the dispute settlement with which Saddle Creek has failed to comply.

Ziek will make the settlement payment to Blast Energy on behalf of Saddle Creek, and Ziek will receive a fee of 15% of all cash distributed.

As previously reported, in May, Saddle Creek denied the company's allegations that it had breached the oil rig drilling dispute settlement and asked the U.S. Bankruptcy Court for the Southern District of Texas to resubmit the dispute for mediation.

According to Saddle Creek, after mediation was complete and after Blast Energy filed a motion for approval of the settlement in question, Saddle Creek received a notice of termination of a related oil and gas lease.

Saddle Creek said it immediately attempted to resolve the lease termination issues, but could not do so.

Saddle Creek said its counsel advised the court and Blast Energy debtor Eagle Domestic Drilling Operations LLC that the new dispute could severely impact Saddle Creek's ability to comply with the oil rig drilling dispute settlement agreement.

Following its attempts to make minor changes to the settlement agreement, Saddle Creek said it was denied access to the property to complete the well drilling.

Blast Energy, a Houston-based provider of fabricated mobile drilling rigs to the oil and natural gas sector, filed for bankruptcy on Jan. 19. Its Chapter 11 case number is 07-30424.

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