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Denver Company Buys D&L Assets for $20.7 Million
YOUNGSTOWN, Ohio -- The U.S. Bankruptcy Court of the Northern District of Ohio Tuesday approved the sale of the assets of D&L Energy Inc. to a Denver company for $20.7 million.
Resource Land Holdings LLC emerged as the successful bidder for the assets of the beleaguered energy company that filed for Chapter 11 earlier this year.
According to documents filed with the court, four qualified bidders attended an all-day auction in Cleveland Nov. 13. The auction was continued to Nov. 16 with two buyers present.
The asset purchase agreement approved Tuesday includes D&L's participation in joint ventures in pipeline agreements, operating agreements, lease inventories, real estate, equipment, and its subsidiaries.
D&L held 30,581 gross acres in Crawford, Mercer, Jefferson and Clarion counties in Pennsylvania and Mahoning, Trumbull, Noble, Columbiana, Tuscarawas, Stark and Portage counties in Ohio, court papers say. The acreage covers rights to the Marcellus and Upper Devonian shale formations.
The D&L subsidiaries in the purchase agreement are Petroflow Inc., and three disposal-well operations: North Star Disposal II, North Star Disposal V and North Star Disposal VI.
A fourth disposal well site, the North Lima Disposal Well #4, is to be negotiated in a separate asset purchase agreement for $4 million, documents say.
Other assets are equipment such as frack tanks, furniture, fixtures and computers, and rolling stock, the purchase agreement says.
Under the agreement, Resource Land Holdings does not acquire any D&L liabilities.
Calls to Resource Land Holdings were not returned as of this posting. The company's mission statement on its website says its objective is to build a portfolios of "resource-rich real estate that produce current income and realize[s] their potential for long-term appreciation."
To date, Resource Land Holdings has managed two separately funded entities as well as four private equity funds.
Resource Land has invested in limestone quarries in Texas, coal surface mines in the Midwest, Florida citrus operations and other holdings related to agriculture, timber and "other resource properties that are often ignored by the institutional investment community," its website says.
When D&L filed for Chapter 11 bankruptcy in April, it cited "extensively intertwined business dealings, accounts and finances" of its officers and business entities, cleanup and litigation costs, and accused former CEO Ben Lupo of "improperly diverting" company funds to other companies he operates.
A D&L affiliate company, Hardrock Excavating, Lupo, and a former employee, Michael Guesman, were charged in February with one count of violating the U.S. Clean Water Act. According to the government, Guesman, under Lupo’s direction, on several occasions illegally dumped contaminated drilling wastewater into a storm drain on D&L's property.
That oilfield waste seeped into a tributary of, and eventually into, the Mahoning River. The Ohio Department of Natural Resources subsequently revoked all the operating permits D&L held.
Guesman has since pleaded guilty; Lupo has pleaded not guilty.
Sunpro Inc. of North Canton, the company's largest creditor, said at the time of the bankruptcy filing that it was owed $1.5 million for cleanup costs related to the illegal dumping. D&L stated in docutments that it owed more than $5.2 million to its largest creditors.
D&L Energy first attained notoriety when its Northstar Disposal Well #1 -- not included in the asset purchase agreement -- was discovered to have triggered a series of earthquakes that struck the Mahoning Valley from March 2011 to January 2012.
Copyright 2013 The Business Journal, Youngstown, Ohio.
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