May 19, 2020 / 6:04 PM / by Tstevana Paraskova of Oilprice.com
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Just three out of twelve public oil and gas firms in the United States have so far said they had returned loans received under the program to help small businesses keep employees during the COVID-19 pandemic, Reuters reported on Tuesday, citing securities filings.
The Paycheck Protection Program (PPP) of the U.S. Small Business Administration was intended for small businesses that do not have access to other sources of funding, such as bond or equity markets.
The PPP, a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll, will be forgiven by the SBA if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities, the Administration says.
But in the initial confusion about guidance on who is and who is not entitled to receive loans under the program, many listed companies have applied for and received such loans, including a dozen smaller but listed U.S. oil and gas firms.
Three of those, PDC Energy, Natural Gas Services Group, and Dawson Geophysical have returned millions of U.S. dollars in loans they had received under the PPP loan.
Denver-based PDC Energy said in an SEC filing in early May that it had applied for and received a US$10 million loan in April through the PPP.
"Pursuant to recently released guidelines with respect to the CARES Act and the SBAPPP loans, we returned the $10 million of funds," the company said.
Natural Gas Services Group's chief executive Stephen Taylor said on the earnings call this month that the firm had applied for and received a US$4.6 million loan under PPP. Although the firm still considers it eligible under the program, NGS decided to return the loan. But after returning that loan, NGS was forced to reduce its workforce by 20 percent, or roughly 50 of team members, Taylor said, noting that, "In effect, public companies in our employees were discriminated against what became a politically driven process."
Dawson Geophysical of Midland, Texas, said last week it had returned the US$6.37-million loan it had received under PPP "out of an abundance of caution and in light of the new guidance."
Other companies have also received loans under PPP, but have not indicated yet whether they intend to return those loans, according to Reuters.