Orange County Oil Spill Villain is a Company Backed by Avenue Capital
Posted on 10/04/2021
There was a major oil spill off the Orange County coast that left crude spoiling beaches and killing fish and birds. The oil spill came from a pipeline off the coast of Huntington Beach connected to an offshore oil platform known as Elly. Some 126,000 gallons of crude oil spilled into coastal waters – spread across 13 square miles of the Pacific Ocean. California banned new offshore oil operations decades ago, but offshore platforms continue to operate in U.S. federal waters.
Beta Operating Co. is a subsidiary of Amplify Energy Corporation that operates Elly. Amplify Energy is an oil company based in Houston, Texas. Amplify CEO Martyn Willsher said at a press conference that the pipeline had been shut off and remaining oil suctioned out.
Some of the largest shareholders in Amplify Energy are hedge funds including Two Sigma Investments. At one point, Fir Tree Capital Management LP (Fir Tree Partners) held 9,585,850 shares, or 25.2% of the company. Avenue Capital Management II LP (Energy Opportunities Fund) held 2,561,375 shares, or 6.74% ownership. Avenue Capital is run by distressed debt financier Marc Lasry. Lasry and his sister Sonia Gardner co-founded Avenue Capital in 1995. Avenue Capital has an Energy Opportunities Fund invests in such assets in energy and utilities in the U.S. Oddly enough, Avenue Capital also lists environmental and sustainable opportunities in line with UN sustainable development goals as one of its strategies.
Fir Tree Partners’ founder Jeffrey Tannenbaum invested his own money through a new firm called Titan Grove in 2019. According to Titan Grove’s website, “Titan Grove builds profitable, impact-driven businesses that transform industries and promote sustainable, healthy, and just capitalism.”
At one point, Pine River Capital Management LP held 1,504,444 shares or 3.96% ownership. Pine River exited its Amplify Energy position in the second quarter of 2017.
California Pensions Backing Offshore Drilling
Santa Barbara County Employees’ Retirement System is an investor in the Avenue Energy Opportunities Fund, L.P.
Shell Oil
Drilling in the Beta Field was discovered by a consortium led by Shell Oil Co. in 1976. In January 1981 oil production started in the Beta Field. In early 2017, Memorial Production Partners filed for Chapter 11 bankruptcy which was the owner of Beta Field’s operations. Several months later, Memorial Production Partners became Amplify Energy.
As ESG-focused shareholders pursue oil majors like ExxonMobil, Chevron, and BP to dump oil & gas production assets, smaller businesses are picking them up. Some of these businesses have less resources for site maintenance and infrastructure.
Keywords: Santa Barbara County Employees Retirement System.
CORRECTION: Fir Tree and Pine River exited the positions earlier than initially reported.