W&T ban from bidding for oil could last 3 years, EPA says

Tue Dec 3, 2013 5:57pm EST

Dec 3 (Reuters) - Oil and natural gas producer W&T Offshore Inc's ban from bidding on federal government contracts in the Gulf of Mexico could last up to three years, the U.S. Environmental Protection Agency said on Tuesday.

The EPA issued a temporary ban against the small Gulf of Mexico producer last month after it pled guilty earlier this year to spilling some oil from a drilling platform in 2009. The ban was effective immediately, the agency said.

"The letter from the EPA is pretty vague to me," W&T Chief Executive and founder Tracy Krohn said on Monday. "We're a little unclear on what this exactly means."

He added he did not know whether his staff had been in contact with the EPA. W&T has not appealed the ban.

The EPA told Reuters that the company must appeal and would be granted a hearing. At the end of hearing, W&T could face a three-year debarment that would affect all of its operations in the Gulf.

Shares of W&T fell 1.2 percent to $16.70 in Tuesday trading.

W&T said last week that it received a letter on Nov. 19 from the EPA temporarily suspending the company from bidding on federal oil and natural gas contracts, and that, after an inquiry, W&T could possibly lose the right to bid for up to three years. The measures would affect future business but not existing deals.

The letter was connected to a 2009 incident in which a small amount of oil was dumped from a Gulf drilling platform and a contractor altered water discharge samples. W&T pled guilty earlier this year and paid a $1 million fine.

Krohn, who owns 53 percent of the company and is its largest shareholder, said he was unaware whether the sanctions, if imposed, would begin immediately or be retroactively applied starting in 2009.

While the sanctions would cause little harm to W&T's current operations in the U.S. Gulf of Mexico, they would place the company in the unwelcome category of BP Plc and others prohibited from doing business with the U.S. government.

Since its 1983 founding, W&T has mainly grown by acquiring minority or majority stakes in leases from Total and other large rivals.

The uncertainty around the inquiry has weighed on W&T's shares, which have slipped nearly 15 percent since the company said on the eve of the U.S. Thanksgiving holiday it had received a letter from the EPA.

Krohn said he is not concerned by the inquiry and that the company continues to operate normally in the Gulf.

"The idea that we would be debarred from doing business in the Gulf of Mexico because of an unreported spill or some sort of violation four years ago which has been corrected," he said, "is kind of remote for me." (Reporting by Ernest Scheyder; Editing by Terry Wade and Leslie Gevirtz)

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