Bookmark & Watch it Grow – the Safety.com Patrol is wants to share this hidden information about Corporate Negligence, Executive Shenanigans, and just plain NASTY Business in Louisiana – Oil Execs and a “Green” Bio-Fuel Company are playing tricks to avoid inspection and fines when they know their field is about to spill into the Gulf!
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UPDATE - Their Internal Communications

#1
Subject: Coquille Bay- Important

Board:

We previously had a trade made with Cole Business Systems at Coquille Bay. As you know, we had all the docs executed and the deal was almost complete when Cole presented a counter offer. If effect, they are not willing to sign a note(s) or to assume any vendor debt for us. All they are willing to do is take over the properties.
That being said, it is of paramount importance that the new counterproposal [sic] from Cole be agreed to and fully executed in the next few days.
Some of the reasons are:

1) We are under a demand from our bonding company to pay the premium ($23,500) to renew the SSTA plugging bond ($1,156,000) or the bond will be subject to termination. If this bond is not renewed the State of Louisiana will begin drawing down on the bond . They may do that anyway as the current bond only covers a portion of the required amount of the mandatory bond. If the State begins drawing on the bond, our bonding company will look to us to pay them what is being drawn.
2) The Coast Guard and our environmental consulting firm are trying to schedule a safety/spill prevention meeting with our field personnel. As long as we own this property, we have to have these meetings. They are required. Noncompliance is an issue we have to avoid.We can delay this meeting if a change of ownership is proceeding.
3) Gas pressure is building up in the field, increasing the chances for a leak or spill. We have no vendors who will sell to us. If we have a spill /leak, we have no way to control it or stop it. We have no employees to help us. I highly reccommend [sic] that our field superintendent, Terry Louviere, be immediately paid for his second pay period in January during this transition period. That is a grave matter in post BP offshore Louisiana. Further, as we are not paying our people in the field, they are not on site to monitor and possibly prevent a problem.

We are out of options. As the contract operator at Coquille Bay, I am formally advising Imperial of these problems and am advising Imperial to agree to the latest counterproposal [sic] as soon as possible. I expect the revised paperwork to be in Middletown by Friday. Without any delay whatsoever, it should be executed and expressed back to Cole immediately (Saturday). The changes are what has been previously discussed in this email and the email I forwarded you yesterday, so the normal lengthy legal review is not needed and will further be a continuing detriment to the company.

If there are any questions, please call me at [OMITTED]

#2

Subject: RE: Coquille Bay- Important
Greg,

Can we shut these wells down? Will that reduce the chance of a spill? Lets seriously look at our options? Wold like to discuss tomorrow when you have a chance.

thanks

Tim

REPLY To more fully describe my feelings, should you decide to hold on to this property, I will immediately convey my company , Hillside, to Imperial, so that Imperial can then operate the wells without me. I am unwilling to continue in this role.
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UPDATE - Their Internal Analysis (Document)
Re: Coquille Bay,
Plaquemines Parish, LA

Dear Tim:

The purpose of this letter is to give you my evaluation of the subject oil and gas properties.
The Coquille Bay lease consists of 19 oil/gas wells, 1 saltwater disposal well an 1 production platform. The lease is currently non-productive due to low gas volumes. As this is a gas drive field, high gas volumes are required to produce oil. Historically, Imperial has produced the field using produced gas until the gas is depleted, then shut the wells in until the gas builds up enough to run the system again. Typically, the field requires about 4 months to build gas up to suitable levels. This is a field wide problem experienced by several operators. Law requires gas to be used must be produced gas and tanks may not be set on platforms as a source of gas supply.
The property is operated under a State of Louisiana State operating Agreement, which states that the property must be productive to perpetuate the term of the Operating Agreement. In other words, lack of production endangers the lease. We are within a short period of time of losing the lease due to lack of production and having it revert to the State.
To operate State Operating Agreements in State of Louisiana waters, a bonded and approved operator must have an SSTA bond. Imperial’s bond is in the amount of $1,156,000. The State has notified us the bond requirements are $1,400,000 and we are under demand letter from the State to meet this threshold or they will begin collections with our bonding company, US Specialty Co. We owe InDemco, the insurance agent the sum of $23,500 to pay the premium on the lesser bond and will be required to obtain the additional $244,000 in bonding from a different source, as InDemco has turned us down in our request for additional bonding. Once the State begins drawing on the Irrevocable Bond, they will fund their SSTA (plugging fund) accounts and begin plugging the wells. They will terminate our State Operating Agreement. InDemco/US Specialties will sue us to repay them for the bond.
The property self is currently not producing. Besides the gas volume issues, we have a capacity problem in our salt water disposal well which limits our ability to dispose of the required volume of produced water. The capacity to dispose of produced water is tied directly to the ability to produce oil/gas. The cost of the work required to alleviate/repair this problem is approximately $300,000 and the AFE (Authority for Expenditure) is in Imperial’s files.
We are currently not paying any of the three persons required to operate the operation. Our field foreman, Terry Louviere, has been going to the field sporadically. He cannot do that anymore because our fuel supplier, Martin Fuels, has suspended our account. Fuel is required for the boat to get to the field , operate the wells and for use in the generator to supply power to the production platform. The other individuals, Ralph Johnston and Juan Pedraza, are needed to operate the field. They are owed monies for about 2 months fees. Several other vendors such as Xpress Supply, Inland Services, Xtterran and Pearl River Navigation have unpaid balances with Imperial totaling over $500,000.
In its current state, the property has negative value. Value can be added with a series of walkovers. Imperial currently has AFEs in its file covering 4 workovers costing about $300,000 each. To properly operate the field costs about $60,000 per month.
We currently have an opportunity to convey this property to Cole Business Systems. The trade involves a conveyance of the property to Cole for no cash or other consideration. This trade is highly advantageous for the shareholders of Imperial. In the near future, approximately 90 days, Imperial is going to be faced with the following situation:
a) the State Operating Lease has been lost due to lack of production, thereby eliminating our ability to produce oil;
b) the SSTA bond will have been drawn upon in the amount of $1,156,000;
c) US Specialties will be demanding payment of the value of the bond from Imperial;
d) liens upwards to $500,000 will be filed against Imperial.

Environmentally, Imperial’s future is much more dire. Currently, we have at best our field foreman sporadically checking on the field. Previously, we had personnel on lease 24 hours per day, every day. The threat of a leak, spill or some other event that causes oil in the water is great. Once you have a spill the Louisiana Department of Natural Resources, Environmental Protection Agency and the US Coast Guard become involved. Furthermore, if we have a leak, we do not have the personnel or ability to purchase supplies to control or remedy the leak. Due to the great expense, we do not carry pollution insurance. I have been in contact with the Coast Guard while they were on our platform for a safety inspection. I have been advised our financial situation is of no concern to them and same does not diminish our obligations to adhere to the law. After the BP explosion and spill, environmental law is an extreme concern in southern Louisiana.
In conclusion, any value this property has or had is offset by the high operating costs to operate the field, the cost to remediate the saltwater disposal system, the unpaid workers, unpaid vendors and most of all the dim prospect of finding enough gas to run the gas drive system to produce oil. This property is not an asset. Further, the risk to Imperial currently is very real. The chance of an environmental problem, due to our inability to prevent of manage same, is enormous threat to the company. Lastly, should the property remain in its current non-productive state much longer, we will love all ownership to the lease and have nothing to sell, only obligations to satisfy.

Yours Very Truly,

Greg
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UPDATE - Funny what is made public (and Not!)

press release

Feb. 16, 2012, 1:06 p.m. EST
Imperial Petroleum, Inc. Announces Sale of Coquille Bay Field Properties
- Sale Results in Cost Savings of $60,000 per Month and Release of $1.4 Million Bond -

MIDDLETOWN, Ind., Feb 16, 2012 (BUSINESS WIRE) -- Imperial Petroleum, Inc. (otc qx:IPMN), a leading biodiesel and diversified alternative energy company, today announced that it has finalized the sale of its share of the ownership of the Coquille Bay Field located in Plaquemines Parish, Louisiana.

Mr. Tim Jones, Acting CEO of Imperial Petroleum, stated, "The Coquille Bay field has the potential to generate a meaningful amount of oil and gas but the costs of repairing it after the damage that was caused by Hurricane Katrina and the ongoing costs of operating it, made it a burden that made little sense for a company that was concentrating its efforts on biofuels."

"Consequently, after an extensive period of discussions with the other owners we have reached a binding agreement that relieves Imperial Petroleum of the considerable monthly cost of approximately $60,000 and enables us to cancel the $1.4 million bond that we were required to carry," stated Mr. Jones.

"Eliminating this issue will enable us to refocus on the growth potential of biofuels and bring added value to our shareholders," concluded Mr. Jones.

About Imperial Petroleum

Imperial is an energy company headquartered in Middletown, Indiana. The Company is engaged in two principal areas of energy production: (i) biodiesel and biofuels production and (ii) non-traditional oil production of heavy oil from mineable tar sands.

Forward Looking Statement

This press release may contain "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995. Such statements are based on management's current expectations and are subject to a number of factors and uncertainties which could cause actual results to differ materially from those described herein. Although the Company believes that the expectations in such statements are reasonable, there can be no assurance that such expectations will prove to be correct.

SOURCE: Imperial Petroleum, Inc.

Wolfe Axelrod Weinberger Associates, LLC
212-370-4500, 212-370-4505 fax
Stephen D. Axelrod, CFA
steve@wolfeaxelrod.com
or
Adam Lowensteiner
adam@wolfeaxelrod.com

Copyright Business Wire 2012
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Salient points:
Oil Field in Louisiana on a Bay
16 Wells + Platform
The Owners are attempting to sell/trade property to avoid calamity…
Current Owners/Operator include a Publicly Traded Energy Exploration and Development Company, a "Bio-Fuel" group (that promotes how "green" they are), an Industrial Distributor, and a 30+ year old Oil Management company.
1) They are under a demand from their bonding company to pay a premium to renew their plugging bond ($1 Million Bond) or the bond will be subject to termination. If this bond is not renewed the State of Louisiana will begin drawing down on the bond. They may do that anyway as the current bond only covers a portion of the required amount of the mandatory bond. If the State begins drawing on the bond, the bonding company will look to them to pay them what is being drawn.
2) The Coast Guard and their environmental consulting firm are trying to schedule a safety/spill prevention meeting with field personnel. There are no Field Personnel (field inoperative) These meetings are required. Noncompliance is an issue they have to avoid. They are attempting to delay this meeting with a change of ownership.
3) Gas pressure is building up in the field, increasing the chances for a leak or spill.
4) The Group has no vendors who will sell to them. If they have a spill /leak, they have no way to control it or stop it.
5) They have no employees to address the issue.

According to this ownership/management group: (Their own correspondence)
They are out of options.
They are in a no-win situation.
This property is worthless and the downside is fatal.
The gas pressure is building and that, along with no preventative maintenance and no means or people to help reduce the chances of a problem, is a terrible combination.
This is the worst property they have ever seen.
These wells are currently shut in. Once they turn them on, they increase the fluid movement and thus the chances of a problem.
They have no upside.
All they have is a downside that will damage their shareholders and could very possibly have personal downside to all of directors.
Failure to execute a pending sale/trade/ownership change agreement will be fatal to the company

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