Pacific Energy proposes $100 asset sale California oil and gas producer looks to shed stake in Trading Bay oil field in Cook Inlet, unload debt and other obligations Wesley Loy For Petroleum News
Financially troubled oil and gas producer Pacific Energy Resources Ltd. is proposing to sell some of its most valuable assets in Alaska’s Cook Inlet for $100.
The asset package includes Pacific Energy’s interest in the Trading Bay oil field, which Chevron operates.
A judge in U.S. Bankruptcy Court in Delaware, where Pacific Energy is involved in a Chapter 11 reorganization, considered the company’s proposed sale in an Aug. 12 hearing, but the outcome couldn’t be immediately confirmed. One Petroleum News source said the judge approved the sale contingent on the buyer finding financing.
Pacific Energy identified the buyer as Ocar Energy, a Delaware limited liability company with a business address in Toronto, Canada. Delaware records show that Ocar Energy LLC was incorporated in that state on Aug. 4 of this year.
Sale terms Pacific Energy filed a 77-page purchase and sale agreement that sets the price for the assets at $100 cash.
The tiny purchase price, however, doesn’t reflect the true size of the deal as the buyer would assume some major financial obligations, court papers say.
Chevron’s lawyers have said Pacific Energy owes at least $43.6 million for its share of production costs, maintenance and other expenses in the Trading Bay unit, of which Pacific Energy holds a 47 percent share.
What’s more, the buyer would assume “future plugging, decommissioning and abandonment obligations” associated with the sale properties, lawyers for Pacific Energy said.
The lawyers told the court a sale is contingent on the buyer finding financing for the transaction.
A spokesman for Pacific Energy, based in Long Beach, Calif., could not be reached immediately to discuss the status of the Ocar deal.
An official in the Alaska Division of Oil and Gas said little was known about Ocar.
Broad liquidation Pacific Energy, citing millions of dollars in losses on its Alaska holdings, also is trying to sell a second package of Cook Inlet assets to a different buyer.
That package includes assets that Pacific Energy itself operates: the 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 LLC operates; some exploration properties; and a 50 percent stake in Cook Inlet Pipe Line Co.
Pacific Energy has said in court filings that it has a $7 million offer for these assets from New Alaska Energy, an Alaska limited liability company.
Pacific Energy also is trying to sell its oil and gas properties in California.
The company filed for Chapter 11 bankruptcy reorganization on March 9 citing the steep drop in oil prices toward the end of 2008. Eruptions of Redoubt volcano on the west side of Cook Inlet made matters worse by interrupting oil production, the company said.
Pacific Energy entered the Alaska scene in 2007, buying the assets of Forest Oil Corp. for about $464 million.
Due to debt pressures and the likelihood of further losses, Pacific Energy has said it might simply abandon Cook Inlet assets it can’t sell.
Lawyers for the company and many other interested parties including the state — which has told the court it wants proof of any buyer’s financial and technical fitness before it will transfer leases — are now focused on a Sept. 1 court date where much could be decided.
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