This morning, Forest Oil Corp. announced the sale of 100 percent of its Alaska assets to Long Beach, Calif.-based Pacific Energy Resources for approximately $464 million. The sale, which includes Forest Oil’s wholly owned subsidiary Forest Alaska Operating LLC, will be effective Jan. 1, 2007, and is expected to close June 30, “subject to customary closing conditions and adjustments,” Forest said in a May 28 press release.
The acquisition price includes $380 million to repay Forest Alaska Operating’s term loans, cash of about $68 million to be paid to Forest, and 5.5 million shares of Pacific Energy common stock to be issued to Forest at its current value of approximately $16 million.
Pacific Energy currently produces about 3,000 barrels per day from its California assets, two-thirds of which comes from three offshore platforms in San Pedro Bay, company President Darren Katic told Petroleum News in a May 28 interview.
Katic expects to keep many of Forest’s current Alaska employees.
“We don’t have any infrastructure in Alaska, so we’re looking at keeping the vast majority of the people who are interested in staying, particularly the people who work on the facilities themselves.”
Pacific Energy has not met with any Forest Alaska employees yet, but Katic and his people expect to make a visit to Alaska in the very near future — “probably within the week,” he said.
Katic told Petroleum News that Forest’s Alaska assets will “become a core area” for Pacific Energy.
The Alaska acquisition “represents a tremendous opportunity to build a new position that fits well within our business strategy and expertise. These large legacy assets have exactly the kind of characteristics we look for when pursing acquisition opportunities. The established production, with long life reserves, generates strong predictable cash flow. The multiple infill drilling opportunities provide a low risk means to grow production through redevelopment. Significant undeveloped acreage with multiple high quality exploration targets including Corsair, which alone has 200 million barrel potential, provides large exploration upside,” he said in a May 28 press release.
Katic told Petroleum News that the offshore Corsair prospect is “a high-priority” drilling prospect for his company.
In addition to onshore and offshore California oil and gas assets, Pacific Energy has a participation agreement with Shell and Wolverine that entitles the group to explore and develop oil and gas interests in a 99,000 acre area known as Pacific Creek in Wyoming’s Green River basin.