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NEWS BULLETIN

September 08, 2009 --- Vol. 15, No. 71September 2009

Pacific Energy lists state among four potential buyers of remaining Cook Inlet assets

Imploding California oil and gas producer Pacific Energy Resources Ltd. says the State of Alaska is among four suitors for some of the company’s remaining Cook Inlet properties.

The state is proposing “nominal consideration” for the assets, and would also assume and pay “certain contract cure obligations,” say papers Pacific Energy has filed in U.S. Bankruptcy Court in Delaware.

A hearing is set for 10 a.m. Eastern time Sept. 9 to consider the company’s motion for sale approval.

Pacific Energy on Sept. 2 won court permission to abandon perhaps its most valuable oil production asset, a minority stake in the Chevron-operated Trading Bay unit and field.

Now it’s looking to spin off its remaining Cook Inlet properties, and also abandon office leases in Anchorage and in Bakersfield, Calif., as company executives proceed with “winding down their business operations,” court papers say.

For weeks, the company has been trying to sell a package of Cook Inlet assets including some properties that Pacific Energy itself operates. The state has raised concerns that it might be on the hook for millions of dollars in costs to safeguard wells and other assets should Pacific Energy abandon them.

In court papers, the company identifies three other potential buyers of the assets:

• New Alaska Energy, an Alaska limited liability company, offering $1.33 million plus assumption and payment of contract cure obligations and environmental liabilities.

• Cook Inlet Energy, another Alaska limited liability company, offering $500,000 plus assumption and payment of contract cure obligations and environmental liabilities.

• NTP Oil Corp., offering $500,000 plus assumption and payment of contract cure obligations.

The package of assets for sale includes the Pacific Energy-operated West McArthur River field, the West Foreland field, and the Redoubt Shoal field with its Osprey offshore platform and Kustatan onshore facility. Also included are interests in the Three Mile Creek field, which Aurora Gas operates; some exploration properties; and a 50 percent stake in Cook Inlet Pipe Line Co.

All four purchase offers exclude the Cook Inlet Pipe Line stock, according to the Pacific Energy court filing.

See story in Sept. 13 issue of Petroleum News, available online Friday, Sept. 11 at noon Alaska time at www.PetroleumNews.com

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