New Cook Inlet operator Local firm looks to take over abandoned Pacific Energy assets in $2.25M deal Wesley Loy For Petroleum News
Pacific Energy Resources Ltd. has won court permission to reclaim some of its abandoned Cook Inlet oil and gas assets for purposes of a sale to a new operator.
The key action came on Nov. 25, when a U.S. Bankruptcy Court judge in Delaware signed an order vacating a previous order that had allowed Pacific Energy to walk away from the properties.
Now Pacific Energy is aiming to close a sale of the reclaimed assets to Cook Inlet Energy LLC of Anchorage.
Some of the principals behind Cook Inlet Energy are former employees of Pacific Energy.
Cook Inlet Energy secured the right to buy the properties by submitting the top bid of $2.25 million at an auction Pacific Energy held in early November.
According to the Nov. 25 court order, if Cook Inlet Energy fails to close the purchase, Ramshorn Investments Inc. would be next in line to buy the assets. Ramshorn, a unit of global drilling giant Nabors Industries Ltd., and partner Stellar Energy LLC submitted the next highest bid of $2.15 million at the auction.
The suite of assets includes the West McArthur River oil field, the West Foreland natural gas field, and the Redoubt unit with the Osprey offshore platform. The assets are arrayed along the west side of Cook Inlet.
Pacific Energy had dumped the properties in mid-September because of mounting losses and an inability to execute a quick sale.
The company subsequently organized the auction and asked Bankruptcy Judge Kevin Carey to reverse the abandonment order after a number of prospective buyers emerged.
The buyer Cook Inlet Energy was organized as an Alaska limited liability company on Jan. 13 of this year, state records show.
The company’s president, JR Wilcox, and its chief executive officer, David Hall, are both former Pacific Energy employees. A third partner, Troy Stafford, is chief financial officer.
“We have been working hard all year to try to create a vibrant future for these assets and are very pleased that we have gotten to the brink of closing,” Wilcox said in a recent e-mail to Petroleum News.
The purchase price of $2.25 million isn’t the full cost of acquiring the Pacific Energy assets.
The buyer must cure certain claims and post bonds to satisfy government and landowner requirements.
For example, at closing the buyer must pay nearly $511,000 in unpaid royalties to the U.S. government in connection with West Foreland, the Nov. 25 court order says.
The court order also specifies it won’t take effect unless Dan Donkel, a longtime Alaska oil and gas player, drops a federal court appeal he filed to secure overriding royalty interests. The court order indicates a side deal is in place to satisfy Donkel.
Pacific Energy’s fall The repossession and sale of the Cook Inlet assets further advances Pacific Energy’s efforts to wind down its business in Alaska as well as in California.
The small oil and gas producer, based in Long Beach, Calif., entered the Alaska scene in 2007, buying the Cook Inlet assets of Forest Oil Corp. for $464 million.
Pacific Energy filed for Chapter 11 bankruptcy reorganization on March 9, citing a steep slide in oil prices. Eruptions of Redoubt volcano, which interrupted oil production on the west side of Cook Inlet earlier this year, only made matters worse for the company.
In the overall picture of Alaska oil production, Pacific Energy was a minor player. Its West McArthur River and Redoubt assets produced a combined 1,090 barrels per day in 2008, said Kevin Banks, state oil and gas director.
|