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Pacific Energy asset sale still pending Troubled California company has $8.1 million bid for some Cook Inlet assets, but deal needs judge’s OK amid several objections Wesley Loy For Petroleum News
A potential sale of some of the Cook Inlet oil and gas assets belonging to troubled Pacific Energy Resources Ltd. appears to have been delayed at least until Aug. 4.
That’s the next court date for Pacific Energy’s Chapter 11 bankruptcy case in Delaware, court documents show.
Pacific Energy is hoping to win court approval for an auction the company held on July 20 in New York City. Pacific Energy announced a winning bid of $8.1 million came from a pair of companies registered in the British Virgin Islands, Ammadon Ltd. and Catherwood Ltd.
Pacific Energy said another bidder, New Alaska Energy, an Alaska limited liability company, made the next best offer of $7 million.
A hearing to consider Pacific Energy’s request that a judge approve the sale had been scheduled for July 27, but was cancelled. A rescheduled hearing for July 29 also was cancelled.
Objections to sale Several objections to the sale are pending in court from Pacific Energy creditors and from government agencies with various concerns.
One objector is the State of Alaska, which has said it must see proof the winning bidder has the financial muscle and expertise to operate oil and gas assets safely. Only then can Pacific Energy’s leases be transferred to the successful bidder, state officials say.
The package of properties awaiting sale include those Cook Inlet assets Pacific Energy itself operates or holds for exploration. They include the West McArthur River field and the Redoubt Shoal field with its Osprey offshore platform. The package also includes Pacific Energy’s interests in production assets that Aurora Gas LLC operates, plus a 50 percent stake in Cook Inlet Pipe Line Co.
Pacific Energy tried without success to auction a second group of assets, most significantly the company’s share in the Chevron-operated Trading Bay field.
In court papers, lawyers for Pacific Energy have said the small oil and gas exploration and development company based in Long Beach, Calif., is losing millions of dollars on its Alaska holdings and must either sell or abandon them.
Don’t worry On July 24, lawyers for the company filed a comprehensive reply to the objections to sale approval. In so many words, they said don’t worry about the winning bidder, Ammadon and Catherwood.
The tandem has agreed not only to pay $8.1 million in cash for the assets, but also to assume certain decommissioning liabilities, royalty obligations, environmental liabilities and “all other obligations associated with owning and operating” the assets, the court filing says.
The backup bidder, New Alaska Energy, has agreed to buy the assets “on substantially the same material terms,” but at a price of $7 million, the filing adds.
Addressing the State of Alaska’s objection specifically, Pacific Energy’s lawyers say Ammadon and Catherwood have agreed to submit to the state’s approval process, and that Pacific Energy would remain operator during a 180-day transition. The winning bidder also will cover as much as $800,000 owed to the state under an escrow agreement on potential abandonment costs for the Osprey platform, the lawyers wrote.
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