OneNexus unveils WellSecure for enhanced financial security in oil, gas decommissioning
(WO) — OneNexus, a provider of innovative financial solutions for the oil and gas industry’s decommissioning obligations, introduces its life insurance-like product, OneNexus WellSecure.
Developed by OneNexus to help the energy industry meet the challenge of its ever-growing Asset Retirement Obligations (ARO), WellSecure stands alone as the only insured financial contract that provides long-term financial security for the purpose of funding oil and gas decommissioning liabilities.
WellSecure is a permanent, secure, and guaranteed approach to funding decommissioning costs that aims to help prevent the further accumulation of orphaned wells. A stable financial safety net, WellSecure offers peace of mind to a wide array of stakeholders, including operators, non-operating partners, landowners, and regulators.
Advantages of WellSecure:
Permanent: Structured as an insured financial contract, WellSecure guarantees funding with capital held securely in a regulated insurance company, OneNexus Oklahoma Captive Corporation (OOCC). The defined benefit — the money to decommission the well — is attached to the well and is fully transferable if the well is sold in the future.
Secure: OOCC is licensed and regulated by the Oklahoma Insurance Department (OID). Annual audits and actuarial reviews are required by the OID and performed by Johnson Lambert and Milliman respectively.
Guaranteed: OneNexus WellSecure provides guaranteed financial benefits via its $100M permanent capital partnership with Munich Re, which is structured to provide coverage for more than $1 billion of oil and gas decommissioning liabilities. The guaranteed benefit is paid upon the plugging of a well and funds are distributed when a claim is filed with OOCC, under jurisdiction of the OID.
“OneNexus’ mission is to create a new category of innovative and responsible financial assurance tools to ensure that future generations are not left with the financial burden of today’s oil and gas decommissioning obligations,” said Tony Sanchez, Founder and CEO of OneNexus. “WellSecure provides oil and gas companies an opportunity to build an asset that adds value to their properties, mitigate plugging and abandonment (P&A) risks, and play a vital role in addressing one of the industry’s biggest challenges.”
OneNexus WellSecure enables operators to fund P&A liabilities in current dollars at a discounted rate relative to the overall gross liability, with the rate being determined in part by the life of the well. Because costs are spread out over time, there is minimal impact to current cash flows. Additionally, its contract structure enables oil and gas producers to collect monthly payments from its partners through the Joint Interest Billing (JIB) statement while production cash flows are still strong, eliminating the risk of non-payment by non-operating partners and account shortfalls down the road.
WellSecure’s structure allows companies to reduce the amount of ARO liability carried on their balance sheet, providing them the ability to enhance the value of their assets, rather than watch their value depreciate.
“No new orphaned wells is our mission,” said Sanchez, “and we believe WellSecure is the financial solution that our industry has been waiting for.”