Company’s tax appeal rejected

Terrebonne Parish Assessor Gene Bonvillian told members of the Terrebonne Parish Council he would not accept a tax bill appeal sought by tax advisor K.E. Andrews of Rowlett, Texas, on behalf of Mandeville-based S2 Energy.

“I’ve been in this office for 40 years and this has got to be the worst appeal I’ve seen in my 40 years in office,” Bonvillian said to council members during their regular meeting. “This company acquired two wells offshore for $100 [each]. They assumed a $2.1 million liability and they want you to pay for it. They want to be on the tax roll for $100.”

The value placed on each property by the assessor’s office is listed at $11,697,933.

K.E. Andrews was listed on the council agenda and offered an opportunity to speak to the tax dispute, but a representative did not show for the meeting.

In a cover letter to former Council Clerk Paul Labat and forwarded to Bonvillian, K.E. Andrews representative Steven Marshall claimed economic hardship with a $2.1 million plugging liability connected to the property.

In a telephone interview, Marshall told the Tri-Parish Times that S2 Energy purchased the two wells in a field with equipment in shallow water off the coast of Terrebonne Parish for $100 each and that the oil company is operating at below a break even point.

“I took the opportunity to pull the well information on each of these wells,” Bonvillian said. “In 2010, one of these wells produced in excess of 35,000 barrels of oil. At an average of $80 a barrel that is a $3 million revenue stream not counting the gas that they extrapolated from it.”

Bonvillian said that K.E. Andrews is calling on Terrebonne Parish taxpayers to carry the bill for S2 Energy. “This tax rep company appeals everything,” he said after the meeting. “I guess they think people in Louisiana don’t understand the law. They are not in a negotiable mode. They don’t want to meet half way. They don’t even want to meet three-quarter way.”

“They are losing money [on these wells],” Marshall said. The tax advisor said he did not have the company’s operating income available.

Marshall said he would now appeal the tax bill to the Louisiana Tax Commission.

“We are still waiting on the 2010 review on this. It hasn’t been released yet,” he said.

The full council concurred with Bonvillian’s report and moved to reject the initial appeal. The matter will now advance to the LTC for a ruling.

S2 Energy is involved in the acquisition and development of both offshore and onshore oil production properties.

According to the company’s website, S2 Energy is actively looking for acquisition opportunities in the range between $10 million and $200 million. The company targets operated properties with a balance of producing value and looks for upside potential.

Former partners of Harvest Oil & Gas formed S2 Energy in 2009, following the sale of Harvest to Saratoga Resources for $145 million in cash and stock.