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Vol. 14, No. 42 Week of October 18, 2009
Providing coverage of Alaska and northern Canada's oil and gas industry

Surprise sale proposed

Pacific Energy asks court to reverse abandonment, OK Cook Inlet assets deal

Wesley Loy

For Petroleum News

Pacific Energy Resources Ltd., which in September abandoned nearly all its holdings in Alaska’s Cook Inlet as part of bankruptcy proceedings, is now asking a judge to partly reverse his Sept. 11 abandonment order and approve a sale of some of the assets to a prospective buyer.

In an Oct. 14 motion filed in U.S. Bankruptcy Court in Delaware, lawyers for Pacific Energy propose selling the assets to a firm called Cook Inlet Energy LLC.

According to the Alaska Department of Commerce corporations database, Cook Inlet Energy was organized on Jan. 13 of this year and is based in Anchorage. The owners are listed as David M. Hall of Kenai with a 60 percent stake and Walter J. Wilcox II of Anchorage with 40 percent.

A hearing on the motion is scheduled for 10 a.m. Eastern time on Nov. 3 in the Delaware court.

The 32-page motion says the sale would involve “interests in leased oil and gas production and exploration assets” that Pacific Energy formerly operated or that Aurora Gas currently operates.

The proposed sale price is $875,000 plus other considerations that would be helpful to Pacific Energy, the motion says.

The sale items

Court papers publicly available as of mid-day Oct. 15 did not appear to include a clear list of exactly what properties Pacific Energy proposes to sell.

However, landowners including the state, Cook Inlet Region Inc. and others were believed to have access to such a list for their review and approval.

The proposed sale appears to involve at least some of the package of wells and other assets Pacific Energy abandoned with Judge Kevin Carey’s Sept. 11 order.

Those properties, all located along the west side of Cook Inlet, include state oil and gas leases, the West McArthur River oil field and the West Foreland field with two producing natural gas wells.

Pacific Energy also appears to be proposing to sell a stake in the Three Mile Creek field, which Aurora Gas operates, plus some nonproducing, exploratory holdings that weren’t among assets abandoned in September.

One property that apparently won’t be included in the sale is the Osprey offshore platform, which sits over the Redoubt Shoal field.

In an Oct. 15 interview with Petroleum News, Alaska Division of Oil and Gas Director Kevin Banks was measured in what he would say about the pending deal.

The state generally is pleased at the prospect of a sale, he said, remarking that “half a loaf is better than none.”

The state has been spending tens of thousands of dollars to prepare abandoned wells and other facilities for winter, and is soliciting a contractor for long-term care of the properties.

Forest Oil returning?

Another development in the Pacific Energy bankruptcy case involves the company’s effort to sell furnishings in its offices in downtown Anchorage.

Pacific Energy said in an Oct. 7 court filing that it intends to sell office furniture in its suite at 310 K Street to Forest Oil Corp. for $8,000. A property list shows an array of desks, chairs, tables, bookshelves, file cabinets and “fixed cabinets.”

Forest Oil occupied the same suite prior to selling all its Alaska assets to Pacific Energy in a $464 million deal announced in May 2007.

The pending furniture deal seems to suggest Denver-based Forest Oil might be planning some sort of a return to Alaska.

Calls to a Forest Oil spokesman for comment went unreturned.

Pacific Energy is a small oil and gas exploration company based in Long Beach, Calif.

The company filed for Chapter 11 bankruptcy reorganization on March 9, citing a steep decline in oil prices. Another problem for the company was a series of eruptions of Redoubt volcano, interrupting oil production for a time earlier this year on Cook Inlet’s west side.

Lawyers for Pacific Energy said the company was losing millions of dollars on its Alaska operations and needed to dispose of the properties quickly. Thus, its Chapter 11 reorganization proceeded more like a Chapter 7 liquidation.

The company also is shedding its assets in California.

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