Pacific Energy sells California assets

Pacific Energy Resources is selling its onshore California assets and directing more attention toward acreage in Alaska, the company said May 22.

But that doesn’t mean Alaska won’t face the paring knife at some point in the future.

Looking to reduce corporate debt, Pacific Energy sold its onshore California assets, estimated at 900 barrels per day of oil production and 10 million barrels of oil reserves, for $135 million in cash to an un-named company.

Company officials expect the deal to close in mid-June.

The sale leaves Pacific Energy with offshore assets in California and Alaska, and a participation agreement in Wyoming. The independent will be focusing on those assets.

“Going forward, we foresee sustainable production growth as the company focuses on developing its existing reserve base with the potential for reserves increases through exploration and step-out drilling in offshore California and Alaska,” Pacific Energy said in a summary of the deal.

In addition to paying down corporate debt, the company will use some of the sales proceeds for drilling infill wells on leases in Alaska.

However, Pacific Energy might also sell between 8 million and 10 million barrels of oil reserves in Alaska in the future to further reduce debt, but called that move “potentially unnecessary.”

The company is planning a five well program to develop the Redoubt Shoal field in the Cook Inlet starting in July, and continues to move forward on efforts to develop the offshore Corsair unit by summer 2009.

Some of the wells at Redoubt will “target undeveloped reserves in undrained portions of existing producing fields,” while others will re-enter old wells. The company also plans to install submersible pumps in some wells “to offset natural declines.”

— Eric Lidji