Pacific Energy, state seek bankruptcy deal
As former player in Alaska’s Cook Inlet liquidates, a settlement is reached on state’s $40M claim to cover abandonment costs
For Petroleum News
The State of Alaska is looking to settle huge claims lodged against Pacific Energy Resources Ltd., which is liquidating through a Delaware bankruptcy court.
Papers filed Sept. 21 say the state asserted claims exceeding $200 million against Pacific Energy, which formerly operated or owned stakes in a variety of oil and gas assets around Cook Inlet. The California-based company filed for bankruptcy on March 9, 2009.
The state’s claims concern the Chevron-operated Trading Bay unit and field, and the Marathon-operated Spurr offshore platform. Pacific Energy abandoned its interests in all the properties.
The posted claims of more than $200 million are “associated with, among other things, plugging, abandonment, and decommissioning obligations,” court papers say.
Pacific Energy disputes the claims. But now the company and the state have a settlement pending.
Terms of settlementUnder terms of the settlement, Pacific Energy would allow one of the state’s claims, for $40 million, as a “general unsecured claim” against its subsidiary, Pacific Energy Alaska Operating LLC, which had entered into numerous state oil and gas leases. The sum is “solely on account of PEAO’s share of plugging, abandonment, and decommissioning obligations” for Trading Bay and the Spurr platform, court papers say.
The state’s remaining $160 million in claims would fall away under the proposed settlement.
“The agreement to reduce the amount of Alaska’s claim is the result of a compromise and settlement, as Alaska believes that PEAO’s share of plugging, abandonment and decommissioning obligations relating to the Spurr Platform Interests and the Trading Bay Interests is significantly greater than $40,000,000,” the settlement says.
Pacific Energy, in turn, pledges under the deal to drop its pursuit of $5.7 million in production tax credits from the state plus $2.9 million in royalty overpayments.
The settlement is signed by Lorenzo Marinuzzi, a lawyer for the state, and Gerry Tywoniuk, acting chief executive for Pacific Energy.
Collection uncertainBoth sides have asked a judge in U.S. Bankruptcy Court in Wilmington, Del., to approve the settlement, and a hearing on the matter is scheduled for Oct. 12.
The settlement likely does not mean the state will collect the full $40 million.
Rather, it is one in a pool of claims against Pacific Energy, which has filed a “plan of liquidation” with the court.
Chevron subsidiary Unocal, with its own multimillion-dollar claims against Pacific Energy, has raised objections to the liquidation plan.