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Court OKs Nicolai field sale to Aurora Exploration in bankruptcy
In a court order published on Aug. 22 Judge Gary Spraker of the U.S. Bankruptcy Court for the District of Alaska approved the sale of Aurora Gas’s Nicolai Creek gas field to Aurora Exploration. Completion of the sale requires the approval by the Alaska Department of Natural Resources for the transfer of the Nicolai Creek leases to Aurora Exploration.
The sale includes the leases, the associated production equipment and seismic data relating to the Nicolai Creek unit.
Despite the similarity in the names, Aurora Exploration is a completely separate company from Aurora Gas, albeit both companies having originated from the same family of businesses. Aurora Gas is wholly owned by Rieck Oil Inc. Scott Pfoff, manager of Aurora Exploration, had until a few years ago been president of Aurora Gas - Pfoff left Aurora Gas in 2011 to focus on exploration activities with Aurora Exploration.
Aurora Gas operates five gas fields, including Nicolai Creek, on the west side of the Cook Inlet.
Involuntary bankruptcy Following major problems with two of the company’s projects, a group of the company’s creditors filed an involuntary bankruptcy petition against Aurora in early May 2016. Complicating the company’s financial woes is the non-payment of some state tax credits which the company claims it is owed, but which have been deferred because of an issue relating to proof of payment of some of the gas producer’s costs.
During the ensuing bankruptcy court case Aurora Gas had suggested a sale of its assets to raise money owed to the company’s creditors. An offer in June of this year from Trading Bay Oil & Gas LLC to purchase all of Aurora Gas’s assets fell apart after the Native corporations that are landowners for some of the gas fields declined the terms of the offer.
Subsequently Escopeta Oil and Gas Corp and Aurora Exploration each made offers, just for the Nicolai Creek field, which is entirely in state land and forms Aurora Gas’s main source of gas. According to a court filing Escopeta has subsequently withdrawn its offer. Aurora Gas offered $100,000 in cash for the field.
Urgency Recent court filings from Aurora Gas’s creditors expressed urgency in dealing with Aurora Gas’s assets because, according to the filings, Aurora Gas’s daily expenses would begin to exceed its daily income after Aug. 31.
According to Judge Spraker’s Aug. 22 order, the asset sale includes Aurora Gas’s gas supply contracts other than large commercial contracts held by Helena Energy. Prior to the bankruptcy petition, Aurora Gas had spun off Helena Energy as a separate marketing company holding those commercial contracts. The disposition of these contracts, for which Aurora Exploration has offered $10,000, will require a further court order, Spraker said.
- ALAN BAILEY
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