How Fate -- and $45M From BP -- Gave One Fish Oil Producer a Banner Year
The Gulf Coast Claims Facility that oversees BP's $20 billion oil spill compensation fund has distributed money in such a herky-jerky fashion, it's nearly impossible to predict who will cash in. Bellboys, valets and waitresses in New Orleans have reportedly received more claims money than Louisiana shrimpers, who were directly impacted by the spill. Some fishermen, who profited by filing claims and then getting lucrative work in the cleanup, have been labeled "spillionaires." While others, particularly Vietnamese fishermen with little documentation, have been flat out denied.
In short, the process is chaotic, unpredictable and oftentimes unbalanced. Take Omega Protein (OME), a leading producer of Omega-3 fish oil supplements and fish meal products. The company has received nearly $45 million from the BP claims fund -- the largest payment to a single company so far. And it's all thanks to the menhaden, a little fish that's been used for centuries to help crops grow, and which more recently found its way into your medicine cabinet.
Omega Protein received emergency payments of $7.3 million and $11.4 million in September and October 2010. This month they received a final settlement payment of $26.2 million. Cha-ching.
No, really. The Deepwater Horizon disaster, which shut down fishing areas throughout the Gulf, disturbed what was expected to be a strong year for the company. Omega Protein had a legitimate reason to file a claim. Whether it deserved $45 million in a year when it actually managed to do quite well anyway is another question entirely.
Omega Protein not only collected big payments from BP, the company managed to catch 90 percent of the fish it had budgeted for. Omega Protein chairman and CEO Joe von Rosenberg could barely contain his glee:
We consider this an excellent financial result. When you consider that our 2010 Company budget was approximately 525,000 metric tons of fish, and that we actually caught approximately 474,000 metric tons of fish (approximately 90% of our overall 2010 fish catch company budget), the fact that we received a total of $44.8 million for the Deepwater Horizon incident is a result that we and our stockholders can be very pleased with.Pleased indeed. That $45 million figure is pretty hefty, considering Omega Protein's average annual revenues over the past three years hover around $170 million.
Now, the Gulf oil disaster did hurt the company; fish meal sales volume dropped 29 percent. But Omega Protein also benefited from a global tightening in available fish meal -- again thanks in part to the Gulf disaster. As a result, fish meal prices rose 40 percent higher.
The oil spill fund has been criticized for its sluggish process. But the much larger problem it the wildly disproportionate payments. For example, how can one fisherman, who filed $90,000 in taxable income in 2009, receive only $22,000 in his six-month payment, while another with similar income receive $180,000?
The disparity between who is paid and who is not seems to largely hinge on the sophistication and resources of the claimant. It all starts with the proper documentation, of course. But companies with access to professional resources like forensic accountants and lawyers who have experience in slogging through a bureaucratic process, have a greater chance at cashing in.