Coronavirus stimulus loans go to oil and gas companies that have previously bought back shares: report
At least two oil and gas companies that boosted their stock values by buying back shares last year have received aid through the coronavirus relief Paycheck Protection Program (PPP), The Washington Post reported on Tuesday.
Independence Contract Drilling, a drilling rig operator, reportedly received $10 million in PPP loans, and Amplify Energy Corp., an oil and gas producer, received $5.5 million.
The Post reported that last year, Independence Contract’s board approved $10 million in stock buybacks, while Amplifiy spent $26.2 million.
The report identified a third company, Everflow Eastern Partners, that got $327,000 after buying $129,582 worth of shares from its investors last year.
Everflow President Bill Siskovic told the newspaper that this purchase was not a stock buyback. He said that the company’s investors can make it buy its shares at a certain price once each year.
Buying back stocks removes shares from the market, increasing the price of those remaining, but leaves companies with fewer resources.
The report comes as PPP, which was largely intended for small- and medium-sized firms dealing with COVID-19 fallout, faces scrutiny following revelations that large companies like Shake Shack and the Los Angeles Lakers originally received loans.
Meanwhile, criteria for a Federal Reserve lending program has been loosened, which could help the oil and gas industry acquire more government financing. Following this change, a bicameral group of Democrats unveiled legislation aiming to prevent fossil fuel companies from receiving coronavirus aid.
Progressive group Accountable.US, which has found that the oil and gas industry has received $100 million in PPP loans, slammed the Trump administration over the buyback news in a statement.
“The Trump administration cares more about protecting its corporate cronies than helping the millions of Americans reeling from the economic consequences of this pandemic,” said Accountable.US head Kyle Herrig.
“It’s insulting to hardworking Americans who are still waiting for economic relief that this administration is giving loans meant to help small businesses to big oil corporations who are spending millions of dollars on stock buybacks to enrich their wealthy shareholders,” Herrig said.
Meanwhile, Trump officials have said they support helping the oil industry, which has faced a sharp decline in prices amid the virus and an international trade dispute, but said they oppose the idea of a “bailout.”
“This is not going to be a bailout of shareholders, but this is going to be supporting the national security issue,” Treasury Secretary Steven Mnuchin said last month of assistance for oil.