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August 12, 2009 --- Vol. 15, No. 59August 2009

Pacific Energy proposes $100 sale of Cook Inlet assets including Trading Bay stake

Financially troubled oil and gas producer Pacific Energy Resources Ltd. has found a buyer for another batch of its assets in Alaska’s Cook Inlet.

Pacific Energy, of Long Beach, Calif., proposes to sell its interests in the Chevron-operated assets to Ocar Energy LLC. The sale price is $100 cash, according to a 77-page purchase and sale agreement filed this week in U.S. Bankruptcy Court in Delaware.

The tiny purchase price, however, doesn’t reflect the true size of the deal as the buyer would assume some major financial obligations. Chevron’s lawyers have said Pacific Energy owes at least $43.6 million for its share of production costs, maintenance and other expenses in the Trading Bay unit, of which Pacific Energy holds a 47 percent share.

What’s more, the buyer would assume “future plugging, decommissioning and abandonment obligations” associated with the properties, lawyers for Pacific Energy said.

The deal is contingent on the buyer finding financing for the transaction, Pacific Energy said in court papers filed this week.

The Chevron-operated assets, including the Trading Bay interest, represent one of two batches of Cook Inlet properties Pacific Energy has been trying to liquidate as part of its bankruptcy case. The company said it had been losing millions of dollars on its Alaska holdings and had suggested simply abandoning them if they couldn’t be sold.

A sale to a different buyer is pending for the other collection of assets, which includes oil and gas properties that Pacific Energy itself operates such as the Redoubt Shoal field and Osprey offshore platform, plus a stake in the Cook Inlet Pipe Line Co.

A hearing was scheduled for this afternoon in the Delaware Bankruptcy Court, but the outcome of that proceeding wasn’t immediately available.

According to the 77-page sale agreement, Ocar is a Delaware limited liability company with a business address in Toronto, Canada. Delaware records show that Ocar Energy LLC was incorporated in that state on Aug. 4 of this year.

See story in Aug. 16 issue, available online at noon, Friday, Aug. 14, at www.PetroleumNews.com

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