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Zachry to file for Chapter 11 Bankruptcy. Putting Golden Pass LNG in Jeopardy.
Posted on 5/21/24 at 4:18 pm
Posted on 5/21/24 at 4:18 pm
Link
What Contractor y'all think is taking over there? Lot of money on the table.
quote:
HOUSTON (Reuters) -The lead contractor building a Texas liquefied natural gas (LNG) plant for QatarEnergy and Exxon Mobil (NYSE:XOM) on Tuesday filed for Chapter 11 bankruptcy protection, citing challenges at the project.
Zachry Holdings, which held the lion's share of the $10 billion construction project called Golden Pass LNG, said it was pursuing a "structured exit." Exxon said it would review construction timing and provide an update in the future.
Golden Pass LNG is being built at the site of a former gas-import terminal that has been converted to process natural gas for LNG exports. It is one of two large U.S. LNG terminals whose startup will significantly expand exports in the next 12 months.
"We, along with the other stakeholders, are considering all available options to implement a smooth transition and minimize any impacts," an Exxon spokesperson said. "We plan to continue to fully support Golden Pass LNG through completion."
Exxon, which owns a 30% stake in the project, earlier this year said it expected first LNG production in the first half of 2025.
"Because we have been unable to find a path forward, we have been forced to take action to protect our business," John Zachry, CEO of the San Antonio, Texas-based company, said in a statement on Tuesday.
Zachry Holdings said it faced cost challenges over a change order and billings schedule, and it engaged in negotiations with Golden Pass LNG for additional funding without success, according to its filing in U.S. Bankruptcy Court for the Southern District of Texas.
Zachry's share of the project was valued at $5.8 billion.
Prior to April 2024, Zachry said it was incurring weekly expenses of $30 million to $40 million for payroll, vendor payments, equipment and other costs, but was receiving approximately $70 million per month from Golden Pass LNG
What Contractor y'all think is taking over there? Lot of money on the table.
13
Posted on 5/21/24 at 4:25 pm to LAblues
It’s no wonder they declared bankruptcy. They can’t spell their name correctly.
Posted on 5/21/24 at 4:26 pm to LAblues
quote:
Zachry Holdings said it faced cost challenges over a change order
Posted on 5/21/24 at 4:30 pm to LAblues
quote:
Zachry Holdings said it faced cost challenges over a change order and billings schedule
This why sending in a change order is never the answer to recoup your cost.
If you suck at managing a project and blow through your budget...dont expect owners to step in and pay it to help you out. Especially if youre dealing with Exxon and QatarEnergy.
Two corporations that will (and did) say frick you this is your problem.
You're never too big to fail and Zachry found that out the hard way.
Posted on 5/21/24 at 4:34 pm to 225Tyga
Just from reading what I can find besides the article in the OP, it’s Zachary Holdings, LLC and not Zachary Industrial.
Posted on 5/21/24 at 4:37 pm to rowbear1922
quote:
Zachary Holdings, LLC and not Zachary Industrial.
Its the same company, they just setup the LLC for certain projects actually to protect themselves from this exact situation
Posted on 5/21/24 at 4:45 pm to LAblues
I’m not exactly how the process of awarding a contract this big goes, but it sounds like Zachry shot a low bid out there and couldn’t live up to it.
Posted on 5/21/24 at 5:10 pm to LAblues
When was this thing put out for bid? Years ago? Look at how much materials have gone up. Especially industrial materials for a project this large.
Posted on 5/21/24 at 5:29 pm to 225Tyga
quote:
This why sending in a change order is never the answer to recoup your cost. If you suck at managing a project and blow through your budget...dont expect owners to step in and pay it to help you out. Especially if youre dealing with Exxon and QatarEnergy.
Easy to say, but there are so many variables in construction today, I couldn’t fathom managing a $5B hard dollar job.
And Zachry is far from the first to lose their arse on a massive LNG project. CBI went bankrupt over Cameron
Posted on 5/21/24 at 5:30 pm to PerceivedReality
quote:
When was this thing put out for bid? Years ago? Look at how much materials have gone up. Especially industrial materials for a project this large.
Maybe this should have been addressed before work started.
Posted on 5/21/24 at 5:32 pm to Ten Bears
quote:
nd Zachry is far from the first to lose their arse on a massive LNG project. CBI went bankrupt over Cameron
It’s why a lot of these big contractors are avoiding Lump Sum EPC contracts
Posted on 5/21/24 at 5:35 pm to 225Tyga
Sounds like a grade variety brother in law deal.
Posted on 5/21/24 at 5:43 pm to LAblues
Bechtel will finish it and make huge money.
Work has pretty much stopped at Driftwood, hearing Tellurand is broke.
CB&I bought a turd sold to them by a bunch of frauds namely J Bernhard.
Work has pretty much stopped at Driftwood, hearing Tellurand is broke.
CB&I bought a turd sold to them by a bunch of frauds namely J Bernhard.
Posted on 5/21/24 at 5:45 pm to LAblues
Lump Sum EPC has taken down many companies.
I don't feel sorry for XOM and QatarEnergy having to clean up the mess.
I don't feel sorry for XOM and QatarEnergy having to clean up the mess.
This post was edited on 5/21/24 at 5:46 pm
Posted on 5/21/24 at 5:47 pm to Ten Bears
quote:
CBI went bankrupt over Cameron
The construction contract to build Vogtle Nuclear Power Plant in Georgia is what really killed them. They inherented the project when thew bought Shaw. LNG projects are indeed capital intensive, but are outmatched by the cash needed in Nuclear Power Plant construction. Especially when no new plants were built for over 30 years. They had to hand off the contract to Westinghouse, who did the engineering. Not long after McDermott gobbled them up.
Posted on 5/21/24 at 5:47 pm to AndyCBR
Yeah it’s just stupid to bid lump sum in stuff like this.
Posted on 5/21/24 at 5:49 pm to 225Tyga
quote:
Its the same company, they just setup the LLC for certain projects actually to protect themselves from this exact situation
I read another article and it said all of Zachry’s subsidiaries are part of this bankruptcy.
Zachry has $330mm in unsecured claims. The largest is Sunbelt Rentals with $133mm.
Posted on 5/21/24 at 5:55 pm to Ten Bears
quote:
I read another article and it said all of Zachry’s subsidiaries are part of this bankruptcy.
Zachry has $330mm in unsecured claims. The largest is Sunbelt Rentals with $133mm.
I knew the equipment rental business is good (URI stock for example) but damn that's a big line of credit
Posted on 5/21/24 at 5:59 pm to Miglez
quote:
that's a big line of credit
No shite. I wonder how late the payments are to Sunbelt. This had to start looking ugly some time ago
Posted on 5/21/24 at 8:53 pm to High C
I get that but these projects are multi year projects. We are a subcontractor and we do everything we can to insulate ourselves from this. But it’s hard to price the future in estimates on projects like this. We usually include 7% on material escalation. The alternative is going T&M. But most owners won’t accept it. They want the contractor to carry the risk. And this is what happens when that goes south.
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