|
Hasty Cook Inlet auction Sale set as part of Pacific Energy plan to recoup, liquidate assets it abandoned Wesley Loy For Petroleum News
The fate of some oil and gas assets Pacific Energy Resources Ltd. abandoned in Alaska’s Cook Inlet remained in limbo as the company worked to regain control of the properties and sell them at auction.
Ramshorn Investments Inc., a unit of global drilling giant Nabors Industries Ltd., appeared to lead a growing pack of prospective buyers.
These and other developments in late September and early October continued what has been a bumpy journey toward Pacific Energy’s apparent exit from Alaska.
As part of bankruptcy proceedings, the company on Sept. 11 won a judge’s permission to simply walk away from a package of assets, including the West McArthur River oil field and the West Foreland natural gas field. The company had been unable to find a viable buyer by that date and said it couldn’t keep rolling up big losses on the properties.
Subsequently, Cook Inlet Energy LLC, a company owned in part by a former Pacific Energy employee, stepped up with an $875,000 offer.
On Oct. 14 lawyers for Pacific Energy filed papers asking the judge to vacate his abandonment order. This would allow Pacific Energy to reclaim the assets and then sell them.
The expectation among industry observers was that Pacific Energy might get its wish at a Nov. 3 hearing in U.S. Bankruptcy Court in Delaware.
But it didn’t happen.
Instead, Bankruptcy Judge Kevin Carey set another hearing for 10 a.m. Eastern time Nov. 6.
One reason for the delay stemmed to longtime Alaska oil and gas investor Dan Donkel, who went to the U.S. District Court in Delaware to challenge aspects of the bankruptcy proceeding.
Quick auction planned After Pacific Energy filed to recoup and then sell its abandoned holdings to Cook Inlet Energy, a bevy of other suitors emerged.
In a Nov. 4 legal notice, lawyers for Pacific Energy said the company had received three “qualifying bids,” including the one from Cook Inlet Energy, and would hold a hasty auction.
The second bid came from Stellar Energy LLC, a company incorporated on Oct. 26 in Delaware. Stellar objected to the proposed asset sale to Cook Inlet Energy on grounds that Stellar was willing to pay the higher price of $1.25 million. The owners of Renaissance Alaska are the people behind Stellar.
The third bid came Nov. 2 from Ramshorn. Like Stellar, Ramshorn objected to the proposed sale to Cook Inlet Energy. Ramshorn said it could pay Pacific Energy the superior price of $1.5 million.
Outside of court, a fourth company represented it might end up with the abandoned assets. Miller Petroleum Inc. of Tennessee, in a press release and filing with the U.S. Securities and Exchange Commission, said that if Cook Inlet Energy succeeded in acquiring the properties out of the bankruptcy court, Miller would in turn buy them from Cook Inlet for $875,000.
Pacific Energy said it intended to hold an auction for the abandoned assets at 6 p.m. Eastern time on Nov. 5. The bankruptcy judge could then decide at the hearing the next day whether to approve the sale to the high bidder, the company said.
Pacific Energy’s Nov. 4 notice included one other important note: It said the company’s former interests in the Redoubt unit might be added to the list of abandoned assets to be reclaimed and sold.
The notice didn’t specifically mention the unit’s Osprey oil and gas platform, an expensive flop that’s now a ward of the state.
State officials watch anxiously Alaska officials are keenly interested in the bankruptcy proceeding, as they’ve already had to spend more than $200,000 in public funds to freeze-protect the abandoned assets along the west side of Cook Inlet. They would like to avoid having to babysit the properties long term.
Lawyers for the state have at times expressed reservations about assigning former Pacific Energy leases to any company not demonstrating financial and technical fitness to operate oil and gas facilities.
Kevin Banks, director of the state Division of Oil and Gas, told Petroleum News that any of Pacific Energy’s bidders — Ramshorn, Stellar and Cook Inlet Energy — would be acceptable to the state.
Pacific Energy is a small oil and gas producer based in Long Beach, Calif. It entered the local scene in 2007, buying the Alaska assets of Forest Oil Corp. for $464 million.
The company filed for Chapter 11 bankruptcy reorganization on March 9, citing a steep slide in oil prices.
But the case has proceeded more like a liquidation than a reorganization as the company has worked to either sell or abandon its assets in Alaska and California.
Pacific Energy’s chairman and president, Vladimir and Darren Katic, have relinquished their positions, and the company has dropped most of its Alaska assets, including a substantial stake in the Chevron-operated Trading Bay unit.
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, Banks said.
| 