|
Pacific Energy finds buyer Cook Inlet Energy tops auction for abandoned assets including Redoubt Wesley Loy For Petroleum News
Pacific Energy Resources Ltd. appears primed to deal some of its oil and gas holdings in Alaska’s Cook Inlet to a newly formed Anchorage company partly owned by a former Pacific Energy employee.
But before the sale can go through, Pacific Energy first must regain control of the assets, having abandoned them in September as part of proceedings in U.S. Bankruptcy Court in Delaware.
The buyer in waiting is Cook Inlet Energy LLC, the major owner of which is Kenai resident David M. Hall. Court records indicate he formerly worked for Pacific Energy.
Cook Inlet Energy, which was organized on Jan. 13 of this year, won an auction Pacific Energy held by teleconference on Nov. 5-6. The winning bid was $2.25 million.
That topped an offer of $2.15 million from a partnership of Stellar Energy LLC and Ramshorn Investments Inc., a unit of global drilling giant Nabors Industries Ltd.
Pacific Energy, based in Long Beach, Calif., had abandoned the assets on Sept. 11 because of mounting losses and an inability to execute a quick sale.
It organized the auction after a number of prospective buyers emerged.
Pacific Energy has asked Bankruptcy Judge Kevin Carey to allow it to reclaim the abandoned properties for purposes of completing the sale to Cook Inlet Energy. It wasn’t clear when the judge would act on the request.
The auction format seemed to work to Pacific Energy’s benefit, as Cook Inlet Energy’s original offer was $875,000 and Ramshorn’s was $1.5 million.
Sale includes Redoubt assets The asset package includes the West McArthur River oil field and the West Foreland natural gas field. Both are on the west side of Cook Inlet, where Pacific Energy’s Alaska holdings were concentrated.
A big surprise that emerged during the auction was the inclusion in the sale package of Pacific Energy’s abandoned interests in the Redoubt unit, including the Osprey offshore platform.
Osprey has proven a huge disappointment because of its much weaker than expected oil production. State officials feared it might become a public millstone after Pacific Energy won the court’s permission to walk away from it.
A transcript of the auction indicates a lawyer for the state, Lorenzo Marinuzzi, dangled significant incentives to any company that would take the Redoubt property as part of the sale package.
Among the incentives was a waiver of the nearly $205,000 the state sought as reimbursement for freeze protecting pipelines and other facilities that Pacific Energy abandoned.
Lawyers for Ramshorn and Stellar voiced displeasure that Redoubt was rolled into the auction late and stipulated their bid didn’t include the Redoubt assets.
‘Not over yet’ Kevin Banks, Alaska’s oil and gas director, told Petroleum News on Nov. 10 he was pleased to see a buyer in line for the Pacific Energy properties, including Redoubt.
The state believes Cook Inlet Energy is qualified to operate the assets and assume leases on state land, Banks said.
But he cautioned: “It’s not over yet.” Cook Inlet Energy still must follow through on a number of steps, and the judge must sign an order vacating his Sept. 11 abandonment order to allow Pacific Energy to reclaim and then sell the property.
A side issue is the potential involvement of a Tennessee oil and gas company, Miller Petroleum Inc., which announced on Oct. 26 that if Cook Inlet Energy succeeded in acquiring the properties out of bankruptcy, Miller would in turn buy them from Cook Inlet.
Banks said he believes that announcement has been somewhat misinterpreted. He said the state plans to assign the leases to Cook Inlet, and Miller “is somehow the financial backing behind Cook Inlet.”
| 