Amplify Energy appoints new senior management

Martin Willsher, the CFO of Amplify Energy, has been appointed CEO. He had been the interim CEO since April 2020 when predecessor Ken Mariani retired. Jason McGlynn, currently VP of Business Development, has been appointed CFO.

Amplify Energy was formed in 2019 from the all-stock merger of Tulsa-based Midstates Petroleum and what was Memorial Production Partners. The business focuses on low-decline, mature assets, mainly in the Mississippian Lime formation in Oklahoma and in East Texas/North Louisiana. It has its head office in downtown Houston.

Amplify has debt of $270 million and only $4 million of equity. Therefore it is concentrating on controlling costs and generating cash to pay down the debt.

Mr. Willsher joined Memorial Production Partners in March 2012 as its Director of Strategic Planning. His base salary will remain at $350,000.

Mr. McGlynn joined Midstates in 2013 as its VP of Strategic Planning, Investor Relations and Treasury.  He will receive a base salary of $290,000.

The company also announced a new chairman. Christopher Hamm, who has been on the Board since August 2019, takes over from David Proman, who will remain on the Board.

SEC filing – Amplify Senior Management

CFO steps down at oilfield services company

Jay Nutt has stepped down as CFO of ChampionX, with effect from February 1, 2021. He is replaced by Ken Fisher, a non-executive director and former CFO of Noble Energy, until its acquisition by Chevron last year.

ChampionX was formed , in June 2020, from the all-stock merger of Apergy and the Champion division of Ecolab. Apergy is primarily involved in Artificial Lift while Champion primarily manufactured oilfield chemicals.

Mr. Nutt was the CFO of Apergy prior to the merger. He joined the company in March 2018, just before Apergy was spun off from Dover Corporation. Prior to that, he was the Corporate Controller at TechnipFMC (who announced a CFO change of their own last week).

Because of the merger last June, Mr. Nutt’s resignation is deemed a ‘termination for good reason’ following a change of control. That means he will get a cash payment of $1.7 million (2x base salary plus 2x annual bonus). In addition, all his restricted stock will vest. At the time of the merger, that was valued at another $1.7 million. Mr. Nutt will also be retained as a consultant through June 2021 at $40,833 a month.

Mr. Fisher joined the board of Apergy in April 2018.  He became the CFO of Noble Energy in 2009. Prior to that, he was at Shell and General Electric. Mr. Fisher will receive a base salary of $590,000.

SEC filing – ChampionX CFO change

New CFO appointed at LNG company

Ben Atkins has submitted his resignation as the CFO of NextDecade. He has been replaced by Brent Wahl, who joined the company in June 2019 and is currently the Senior VP of Finance.

The company is based in downtown Houston and is trying to build a LNG terminal in Brownsville, Texas.  NextDecade went public in July 2017 via a reverse takeover of a blank check company.

The company has received permits from the Federal Government for the terminal but won’t start construction until it has signed long-term contracts with customers. Currently, the company has enough cash to last it through the end of this year.

So far, the company has only a 20-year contract with Shell, covering about 20% of the proposed output. Late last year, Engie, a French company, delayed making a decision on a proposed contract with NextDecade. The French government, which owns 24% of Engie, wants the Engie to source cleaner energy. The company suffered another blow last week when Ireland dropped a plan to build a terminal in Cork that would have imported LNG from the proposed Brownsville facility.

Mr. Atkins had been the CFO since November 2015. Prior to that he worked for GE Capital and McKinsey.

Before joining NextDecade, Mr. Wahl was the Head of Midstream Investment Banking for North America at Macquarie Group. He spent nine years there, working on raising finance for LNG facilities in North America.

Mr. Atkins will receive a base salary of $350,000.

SEC filing – NextDecade CFO

Appeals court overturns $4.3 million fine on MD Anderson

The Fifth Circuit Court of Appeals has overturned a $4.3 million fine on MD Anderson Cancer Center. The fine was originally levied by the US Department of Health and Human Services (HSS) in 2018 for HIPAA violations. HIPAA is the acronym for the Health Insurance Portability and Accountability Act of 1996 that governs patient privacy.

Initial breaches

The fine arose out of three incidents that occurred in 2012 and 2013

  • A laptop of a faculty member was stolen. It was not password-protected or encrypted but contained electronic protected health information (ePHI) for 29,021 individuals.
  • An MD Anderson trainee lost an unencrypted USB thumb drive during her evening commute. This contained ePHI for over 2,000 individuals.
  • A visiting researcher misplaced another unencrypted USB thumb drive, containing ePHI for nearly 3,600 individuals.

MD Anderson disclosed these incidents to HSS who determined that MD Anderson had violated two federal regulations One was the failure to encrypt information covered by HIPAA, the other was unpermitted disclosure of protected health information.

HSS also determined that MD Anderson had ‘reasonable cause’ to know that it had violated the rules. The Administrative Law Judge imposed a fine of $2,000 for each day it wasn’t compliant between 24 March 2011 and 25 January 2013 as well as a $1.5 million fine each year for its
noncompliance in both 2012 and 2013. The total fine was $4.3 million.

Law interpreted incorrectly

After MD Anderson appealed to the Fifth Circuit Court of Appeals, the government conceded that the maximum fine it could impose was $450,000. Instead the Appeals Court quashed the fine as being arbitrary, capricious and otherwise unlawful. They ruled that the Judge had not interpreted the law correctly in the following ways;

  • The HIPAA Act states that entities must have a mechanism to encrypt ePHI. MD Anderson gave its employees an ‘IronKey’ to encrypt and decrypt data and trained employees on how to use it. The Appeals Court ruled that was a ‘mechanism’, even if three employees failed to follow it.
  • Under the terms of regulation HSS wrote, disclosure of protected health information was defined as ‘release, transfer, provide and divulge’. In other words, an active participant not a passive loss of information.  Also, the HSS could not prove that that someone outside MD Anderson actually received the protected information.
  • The judge did not consider other cases involving similar breaches of HIPAA. For instance, a Cedars-Sinai employee lost an unencrypted laptop containing 33,000 patient records. No penalty was imposed in that case.
  • Congress stated that for ‘reasonable cause’ violations, the maximum fine was $100,000 per year. Fines for ‘willful neglect’ can be $1,500,000 per year. However the judge had determined that the violations in this case were not the result of willful neglect.

5th Circuit – MD Anderson



TechnipFMC appoints new CFO ahead of proposed split

Alf Melin has been appointed the new CFO of TechnipFMC. He replaces Maryann Mannen, who is leaving to become the CFO at Ohio-based Marathon Petroleum Corporation.

TechnipFMC is in the process of splitting into two publicly-traded companies by hiving off Technip Energies, its Engineering & Construction business. The product business will be based in Houston, while the Energies business will have its head office in Paris.

Mr. Melin has been with the company since 1995 and is currently the Senior VP of Finance Operations. He has has direct oversight of the finance operations of the Subsea segment, He has held various operational roles and is a graduate of Lund University in Sweden. No compensation details were disclosed.

Ms. Mannen joined FMC Technologies in 1986 and was its CFO between March 2014 and January 2017. After FMC merged with Technip, she became the CFO of the combined business. At Marathon, she will receive a base salary of $925,000, a raise on her $803,000 base at TechnipFMC.

Marathon Petroleum is a downstream energy business owning refineries and the Speedway retail convenience stores. In 2011 it was spun out of its former parent, Marathon Oil, which is now an upstream exploration and production company, based in Houston.

SEC filing – TechnipFMC CFO


Famous Houston pastor gets 6 years for $3.5 million fraud

Kirbyjon Caldwell, a famous Houston pastor, has been sentenced to 6 years in prison for conspiracy to commit wire fraud. Caldwell was ordered to pay restitution in the amount of $3,588,500, as well as a fine of $125,000.

Mr Caldwell built up Windsor Village United Methodist Church in SW Houston into a 18,000 member mega church and was a spiritual advisor to President Bush. He offered the benediction at both his inaugurations and officiated at the wedding of President Bush’s daughter, Jenna. He was also a spiritual advisor to President Obama.

Former Investment Banker

Caldwell is a former director at Continental Airlines (until 2011) and NRG Energy (he left the board one month after he was indicted in 2018).  He was also a minority owner in the Houston Texans until recently. Prior to becoming a pastor he was an investment banker on Wall Street and worked for a bond firm in Houston. He has a master’s degree from Wharton School of Business.

The fraud scheme

Caldwell was charged along with Gregory Smith, a Shreveport-based investment advisor. Smith pleaded guilty in July 2019. Smith was also sentenced to 6 years back in November.

Between April 2013 and August 2014, Caldwell and Smith raised $3,588,500 from 29 investors through a fraudulent offer and sale of various pre-1949 Chinese bonds. Caldwell and Smith falsely represented to these investors that the bonds were safe, risk-free, worth tens, if not hundreds of millions of dollars and could be sold to third parties. In reality, the bonds have no investment value.

The Chinese government doesn’t recognize the validity of bonds issued prior to the communist takeover of 1949. It has never paid out on any of these bonds, except once in 1987. As part of the negotiations over Hong Kong, the Brits received 36 cents on the dollar. The US courts have generally said that the People’s Republic of China can assert sovereign immunity in not paying these debts.

Caldwell kept approximately $0.9 million and used it to pay down personal loans, mortgages and credit cards. Smith received $1.1 million of the total monies raised.

Caldwell surrendered his clergy credentials before pleading guilty in March 2020.

At the sentencing hearing, Caldwell’s lawyers presented evidence that he has repaid his victims more than $4 million. They also pleaded for him to be confined to his home, rather than going to prison, citing his ongoing treatment for prostate cancer, as well his hypertension and the threat COVID-19 poses for those incarcerated with underlying conditions.

Caldwell was ordered to report to the Bureau of Prisons on June 22, 2021.

Oilfield services spin-off back on

TechnipFMC has announced that its plan to split into two is back on. The company first announced the split in August 2019 but put it on hold in March 2020 at the height of the pandemic.

The company intends to spin off 50.1% of its Engineering and Construction arm into a new public company called Technip Energies. This will have its headquarters in Paris and be listed on Euronext Paris.

Bpifrance, a 5% shareholder currently, has agreed to invest $200 million in Technip Energies to buy part of TechnipFMC’s remaining 49.9% stake. The ownership stake acquired will depend on average price of the shares of Technip Energies in the first 30 days after spin-off

The remaining business, primarily the production business that was formerly part of FMC, will still be called TechnipFMC and be headquartered in Houston.

The company has disclosed that Technip Energies will be spun off with net cash of $2.7 billion. TechnipFMC will have $1.7 billion of net debt. The current market cap of the combined business is $5.25 billion.

Goodwill impairment

FMC Technologies and Technip announced plans to merge in May 2016 and completed the merger in 2017. The total purchase price was $8.2 billion, including $5.2 billion of goodwill. Since the acquisition, the company has written off $3.4 billion of goodwill, though not all of that relates to the merger

Integration costs

The company spent $262 million on integration costs between 2016 and 2019. Since the separation was announced, the company has spent a further $99 million through September 2020 on separation costs. Impressively, in 2019, the company managed to spend $31 million on merger costs and $72 million on separation costs!

The company expects the separation to be completed in the first quarter.

Houston woman charged in lottery fraud scheme

Gloria KIrk Edmonson, 75, of Houston has been charged for her involvement in a lottery fraud scheme. The case was filed in the Northern District of Alabama, where a couple of the victims lived.

She allegedly persuaded individuals, often vulnerable elderly individuals, to send money and/or valuable property via mail. The individuals were led to believe they had won the lottery and need only pay their taxes or fees to receive their winnings.

Edmonson deposited the money into bank accounts that she controlled. The funds were transferred to other accounts that her co-conspirators had access to via a debit card, which they used to withdraw cash from financial institutions in Jamaica.

The scheme ran from January 2019 to around December 2020. In February 2020, the FBI interviewed Edmonson as part of their investigation, but she alleged that she was herself a victim in the scheme.

The Victims

The location and amounts taken from the alleged victims listed in the indictment include;

  • $22,000 – Holt, FL
  • $7,000 – Jenkintown, PA
  • $10,000 – Brookhaven, GA
  • $10,000 – Normandy Park, WA
  • $7,500 – Cedartown, GA
  • $7,000 – Las Vegas, NV
  • $8,000 – Claypool, AZ

In one instance, an elderly individual from Greensprings, OH sent $500. The package was intercepted by the US Postal Inspection Service and returned to the individual. Subsequently, someone called the Sandusky County Sheriff’s Department posing as the son of the individual and requested a welfare check. Edmonson, or one of her unnamed co-conspirators, also sent a plumbing service to the victim’s home in attempt to regain contact.

Charges and Maximum sentence

A five-count indictment filed in U.S. District Court charges  Edmonson with one count of conspiracy, two counts of wire fraud, one count of mail fraud, and one count of conspiracy to commit money laundering.

The maximum penalty for conspiracy is five years in prison.  The maximum penalty for wire fraud, mail fraud, and the money laundering conspiracy is 20 years in prison.

Justice Dept – press release

Gloria Edmonson – Indictment

CEO departs oilfield services company

Holli Ladhani has left her role as CEO of Select Energy Services. She is replaced by Chairman and former CEO John Schmitz.

The company, which has its head office in the Galleria area, provides water management solutions to the oil and gas industry. It went public in early 2017 and acquired Rockwater later that year for $620 million in an all-stock transaction.

In the first quarter of 2020, it wrote off all $267 million of goodwill associated with that transaction. The company has a market capitalization of $422 million. Unusually, as of September 2020, the company had cash on hand of $185 million and no debt.

Prior to the Select/Rockwater merger in November 2017, Mr. Schmitz was the CEO of Select and Ms. Ladhani was the CEO of Rockwater. After the deal closed, Mr. Schmitz became executive Chairman.

Ms. Ladhani joined Rockwater as CFO in 2011 and became CEO in May 2015. Prior to that, she  had been the CFO of Dynegy.

Ms. Ladhani will receive a cash severance of $3.2 million. That appears to be 2x base salary ($725,000) plus 2x target bonus ($725,000) plus her earned bonus for 2020.

SEC filing – Select Energy CEO transition

Southwestern Energy CFO dies suddenly

Julian Bott, the CFO of Southwestern Energy, has died suddenly after experiencing a sudden non-COVID related medical condition.

The E&P company has its head office in Spring. It has its operations in the Marcellus shale region in Appalachia. Mr. Bott joined the company as CFO in February 2018, having previously been the CFO at Sandridge Energy, based in Oklahoma City.

Southwestern has appointed Michael Hancock, currently VP Finance and Treasurer, as its interim CFO. He joined the company in 2010.