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THE EXPLORERS 2007: Paspalof to head Alaska operations Pacific Energy buys bulk of Forest Oil’s Alaska assets; word is California independent buying jack-up for Cook Inlet exploration Kay Cashman Petroleum News
Pacific Energy Resources Ltd. is looking to make Alaska’s Cook Inlet basin a core area of its operations. The Long Beach, Calif., independent closed Aug. 27, 2007, on its purchase of Forest Oil Corp.’s assets in Southcentral Alaska.
The purchase price was $400 million, plus the issuance of 10 million shares of Pacific Energy common stock and a seller note to Forest with a net present value of approximately $30 million, Pacific Energy said.
When the companies first announced the sale in May 2007, Pacific Energy said it was producing about 3,000 barrels of oil per day in California, two-thirds of which came from three offshore platforms in the federal waters of San Pedro Bay, and that Forest was producing about 5,900 barrels of oil equivalent per day in Alaska.
Paspalof appointed Pacific Energy has played its cards close to the vest since it took over Forest’s assets in Alaska. The first real news from the company came on Oct. 31 when Pacific Energy President Darren Katic told Petroleum News that George Paspalof had been appointed to head its Alaska operations.
According to www.zoominfo.com, from May 1988 through January of 1994, Paspalof was the L.A. basin field engineer for Texaco E&P, where he was in charge of ongoing operations in the Long Beach, Richfield, Aliso Canyon, Inglewood, and Seal Beach oil fields that, combined, produced about 6,000 bpd of oil and 3 million cubic feet of gas per day from 200 wells. Paspalof’s duties included management of field operations personnel, strategic budget planning and management, coordination with local and state entities, and long-term reservoir management.
Paspalof reportedly has extensive experience in implementing waterflood optimization programs.
Before going to work for Pacific Energy, from 1994 to April 2001, he was the president of Global Solutions Inc.
Alaska core area In a May 29, 2007, interview Katic said the Forest acquisition fit his company’s business model which is “looking at older fields that we perceive have lots of upside … but are undercapitalized for various reasons, perhaps because they’ve been passed around in mergers, so they are non-core areas for larger companies. … We see these Cook Inlet assets as fantastic assets that need to be somebody’s core properties. Our intention is to pour a lot of money in the proven, undeveloped reserves.”
Pacific Energy Chief Financial Officer Jerett Creed told Petroleum News Aug. 30 that the company planned to move ahead with exploration of the Cook Inlet acreage it acquired from Forest.
Buying a jack-up? Creed said the company wanted to use a jack-up rig to explore its Cook Inlet offshore prospects, which include Corsair — on the same geologic trend as the North Cook Inlet, Kenai and Cannery Loop gas fields. He said Pacific Energy was engaged in discussions with other companies interested in bringing a jack-up to the Inlet, and with drilling companies.
In May, Katic said Corsair “alone has 200 million-barrel potential, provides large exploration upside … (and) was a high-priority” drilling prospect for his company. (In 2003 Forest said the prospect could also contain as much as 480 billion cubic feet of natural gas.) Petroleum News sources say Pacific Energy is looking at buying a jack-up rig from Rowan, which has three jack-ups for sale that would work in Cook Inlet.
That information coincided with an Oct. 19 announcement by Pacific Energy that it had closed an equity private placement in the amount of US $65.5 million.
“The initial US$40 million of the private placement proceeds will be used to repay a portion of the debt associated with the acquisition of the offshore producing Alaskan assets of Forest Oil … with the balance of funds to be used for development of offshore Alaska and California properties and for general working capital and business purposes,” the company said in a press release.
CIPL in the deal The assets that Pacific Energy bought from Forest include interests in nine producing fields in the Cook Inlet area; nearly 1 million net acres in oil and gas leases; and a 50 percent equity interest in Cook Inlet Pipe Line Co., which owns the 44-mile onshore pipeline that carries crude oil down the west side of Cook Inlet to the Drift River Terminal.
Forest owned 40 percent of CIPL; 40 percent was owned by Chevron (formerly Unocal); the remaining 20 percent was owned by Mobil Pipe Line Co. (part of ExxonMobil).
In late September 2007, the Regulatory Commission of Alaska was considering an application by Forest and Mobil for approval of a sale of half of Mobil’s 20 percent share in CIPL to Forest.
In a separate application, Forest and Pacific Energy have applied to the RCA to transfer Forest’s interest in CIPL to Pacific Energy. Chevron is, and will remain, the CIPL operator. Chevron will purchase Mobil’s remaining shares in CIPL and those companies will then file an application for approval of that transfer.
Pacific Energy has production from a 100 percent working interest in the Redoubt unit (Osprey platform); from a partial interest in the Trading Bay unit (King Salmon, Grayling, Steelhead and Dolly Varden platforms) operated by Chevron; and from its 100-percent owned West McArthur River unit and Kustatan field.
Forest is still operating the Osprey platform under an agreement with Pacific Energy.
Pacific Energy reported total revenues of $8.9 million for 2006 and approximately $157 million in total assets.
Editor’s note: On Oct. 25, 2007, Reuters released a 12-page investment profile on Pacific Energy Resources Ltd., which trades on the Toronto Stock Exchange under the symbol PFE. The profile can be purchased at this Web site: https://commerce.us.reuters.com/
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