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On Aug. 18, 2003, an executive from Key Energy Services testified during a House natural gas task force field hearing co-chaired by Reps. Steve Pearce (R-N.M.) and Heather Wilson (R-N.M.).
Six weeks later, Key Energy closed a deal to buy the assets of Pearce’s oil services company, apparently for $12 million, more than double the value of the company that Pearce had claimed on his financial disclosure forms.
Pearce’s sale of his business highlights just how difficult it can be to glean meaningful information from the financial disclosure forms filed by Members of Congress. Pearce’s forms provide no record of the sale and very little detail about his assets, though the House ethics committee has found him to be in compliance with the disclosure rules.
Roll Call found no evidence that Pearce has taken any legislative action to specifically benefit Key Energy Services.
Key Energy reported to the Securities and Exchange Commission in 2003 that the terms of the sale “were determined by direct negotiations with the owners of the business” — Pearce and his wife, Cynthia. Pearce’s office told Roll Call last week that the Congressman had negotiated the deal with Key between January and June of 2003, and by the time of the August hearing, the price had been set, with only “due diligence” remaining to close the sale.
In e-mail responses to Roll Call’s questions, Pearce spokesman Brian Phillips dismissed any concerns about the timing or the price of the sale. The energy task force “was not an official House committee, had no legislative powers and no jurisdiction,” Phillips said, and though Pearce co-chaired the hearing, he was not the chairman of the task force. In addition, Phillips said, “We have no record how and when the panelists were contacted.”
As far as the sale price of Pearce’s company, Phillips argues that it is standard accounting practice to value a company based on the depreciation of its assets, while the sale price is based on future potential earnings. In its announcement of the purchase, Key said it anticipated Pearce’s company would generate $8 million a year in revenues.
“Everything pertaining to the sale of substantially all of the assets of Lea Fishing Tools, Inc. to Key was done in full compliance with House rules and the ethics committee and was reported properly,” Phillips wrote. “Congressman Pearce has acted correctly and in full compliance with the rules of the House.”
Pearce and Wilson are facing off in a June primary for the Republican nomination to replace Sen. Pete Domenici (R-N.M.), who is retiring.
As a Congressional candidate in 2002, Pearce filed a financial disclosure form listing his largest asset as Lea Fishing Tools, an oil services company in Hobbs, N.M., valued at $1 million to $5 million. In 2003, now a Member of Congress, Pearce again reported ownership of the company, and reported the same value, though he was no longer receiving the $270,000 annual income from the business.
In the parlance of the oil industry, “fishing” refers to a specialized service of fishing out of oil wells tools or equipment that were accidentally dropped down the hole.