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Now according to BPI's own Financial Update the company is in serious financial shape.
"The company is currently insolvent, and its operations do not provide sufficient cash flow for it to pay all of its obligations as they become due," according to the company's news release." That news release goes on to say, " In the event that the company is unable to obtain additional financing in the near term, it will likely file to reorganize under the U.S. bankruptcy code."
Shelby County Board Chairman George Frazier said he is aware of the company's financial problems and does not believe their lease should be renewed.
"They (BPI) have made a proposal to renew their lease at the last board meeting and I do not believe it would be advantageous for the board or the landowners of Shelby County to renew that lease," said Frazier.
The Illinois Landowners Association (ILA) was organized in 2006 to work for the landowners of Shelby County that were immediately affected by the drilling for coal bed methane gas in the southwest one-third of the county by BPI. That organization strongly opposes the county board approving the lease.
Farm Bureau Manager Amy Rochkes is a member of the ILA.
"BPI is planning to present a proposal to the county board in November and from an Illinois Landowner's perspective we now want to push the county board to not accept the proposal because with the information of them (BPI) being insolvent, we don't know who the county would be doing business with," said Rochkes. "If they (BPI) would file for bankruptcy. "
In an open letter to their members and the county board, ILA states that on Sept. 23, 2008 BPI filed a United States Securities and Exchange Commission (SEC) Form 8-K, which claims BPI, has breached the convenants under the advancing term credit agreement from GasRock Capital LLC. GasRock is a venture capital company making loans to companies in the gas and oil business.
That ILA letter goes on to say:
In this document, BPI discloses it has failed to:
*replace James E. Craddock with another manager acceptable to GasRock,
*prevent its adjusted current liabilities from exceeding its adjusted current assets,
*pay all indebtedness due to Superior Well Services, Inc. and other creditors,
*use discretionary D&A loan proceeds only for uses approved by GasRock.
That ILA letter ends by saying, "BPI has made a lot of promises to the county of financial gain. The county has received only a small portion of those financial promises and now, clearly, the county will never see BPI's promises fulfilled. ILA is asking you (county board) to please VOTE AGAINST renewing a lease with BPI."
It should be noted that BPI has paid the county all of the $2.1 million the county was promised. However the royalties that were promised on the methane gas production may be difficult to collect.
It should also be noted calls were placed to BPI by the Daily Union and not returned.
Rochkes said there are 13 wells presently drilled in Shelby County.
"One of those wells is an injection well on property that BPI owns, two wells are what BPI calls 'test wells' that have a monitoring station on them, there are not actually well heads there, so that leaves ten actual wells with well pumping mechanisms on them that currently are all not pumping because they are shut off because BPI is in debt to a local propane supplier. BPI owes local companies money."
To see more of the Shelbyville Daily Union or to subscribe to the newspaper, go to http://shelbyvilledailyunion.com. Copyright (c) 2008, Shelbyville Daily Union, Ill. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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