The Alaska Industrial Development and Export Authority (AIDEA) Board unanimously approved a resolution on March 4 authorizing an AIDEA loan of up to $7.5 million to HEX to buy the Cook Inlet Kitchen Lights offshore unit, related infrastructure such as the Julius R offshore natural gas platform, together with onshore processing facility and related pipelines.

"The loan to HEX is in support of the company's bid to acquire the Kitchen Lights offshore unit and related infrastructure out of bankruptcy from Furie Operating Alaska LLC," AIDEA said in a March 6 email.

The sale would be structured as an acquisition of the limited liability companies (Cornucopia Oil & Gas Company, LLC and Corsair Oil & Gas, LLC) that own the natural gas leases and the natural gas production infrastructure of the Kitchen Lights unit located in Cook Inlet, Alaska, AIDEA said in the resolution.

"The proposed loan to HEX would permit the continued production of natural gas from the Kitchen Lights Unit and enable the production of additional natural gas quantities from the unit, with the natural gas be delivered to utilities and other users in the State," the resolution said.

Furie is moving forward to complete a sale under an acquisition by foreclosure agreement with acquirer Kachemak Exploration LLC, a Delaware corporation recently formed by GFR Holdings of Fort Worth, Texas, and Melody Capital Partners L.P.

HEX was the high bidder in an auction of the assets last fall, but the debtors negotiated the Kachemak agreement after HEX missed deadlines – for subsequent good faith deposits on Dec. 24 and Jan. 10, and to provide proof of financial wherewithal to consummate a transaction by Jan. 10 – each as required under the terms of its bid, the debtors said.

The debtors filed a Feb. 18 motion for approval of a settlement between the debtors, the lender parties, the buyer, the Webb litigants and the RWIO parties.

In a notice of alternative offer filed Feb. 20 by HEX, HEX said it was unable to complete financing for the purchase primarily due to uncertainty created by the pending royalty dispute with the RWIO (royalty and working interest owners) group, adding that HEX could not forecast its future income and expenses, therefore its lenders were unwilling to commit.

"HEX understands that the pending sale motion will go forward, but the debtors have agreed to work with HEX for two weeks to see if a better transaction can be structured," the notice said.

- STEVE SUTHERLIN

See full story in March 15 issue, available online Friday, March 13, at www.PetroleumNews.com

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