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Hilcorp deal closes Houston independent takes over in Cook Inlet for Chevron subsidiary Union Oil Kristen Nelson Petroleum News
The closing came as predicted, at the end of the year.
Some of Cook Inlet’s oldest oil and gas facilities now have a new owner, with Chevron subsidiary Union Oil Company of California giving way to Houston-based independent Hilcorp, whose Hilcorp Alaska LLC subsidiary assumed operation of Union’s Cook Inlet assets Jan. 1.
The sale was announced in July; financial terms were not announced.
In a Jan. 4 statement Hilcorp said it “welcomes over 230 new Alaskan employees to the company and recognizes the skills and experience they bring to the company.”
Hilcorp Energy Co., founded in 1989, is one of the largest privately held independent oil and natural gas exploration and production companies in the United States, with 700 employees in the Lower 48.
“Hilcorp continues to grow by actively acquiring and developing conventional assets while expanding its footprint into a number of new resource plays,” the company said.
In October Hilcorp named John Barnes as senior vice president for its Hilcorp Alaska LLC subsidiary. Hilcorp said Barnes, formerly with Marathon in Alaska and most recently senior vice president of operations and maintenance services for CH2MHill, brings both producer and contractor experience to the position.
Plans for Cook Inlet Hilcorp said in its Jan. 4 statement that its “focus is to continue to develop and produce Cook Inlet’s resources in a safe and environmentally sound manner that will provide benefits for the company, its employees and the State of Alaska.”
Assets which Hilcorp acquired include Union Oil contracts and interests in the Swanson River, Granite Point, Middle Ground Shoals, Trading Bay and MacArthur River fields; interests in 10 offshore platforms; interests in onshore gas fields including the Ninilchik Unit and the Beluga River Unit; and two gas storage facilities.
When the sale was announced in July production from the assets was listed as some 3,900 barrels of oil and 85 million cubic feet of natural gas per day.
As of November production data from the Alaska Oil and Gas Conservation Commission, Granite Point, McArthur River and Middle Ground Shoals — among the interests acquired by Hilcorp Alaska — are the only fields in Cook Inlet with average production of more than 1,000 barrels per day.
The sale also includes interests in the Cook Inlet Pipe Line Co. and Kenai Kachemak Pipeline LLC.
Chevron retains its non-operated joint venture interests on the North Slope and its 1.36 percent interest in the trans-Alaska oil pipeline.
State transfers required State approvals were required, including regulatory approvals for pipeline transfers.
The Regulatory Commission of Alaska approved transfers of interests in Cook Inlet Pipe Line, Cook Inlet Gas Gathering Systems and Kenai Kachemak Pipeline in December, subject to approval of transfers by the Department of Natural Resources of interests in right-of-way leases.
DNR Deputy Commissioner Joe Balash said Dec. 13 that the department had work under way in multiple divisions on various lease assignments related to the sale, including oil and gas leases, easements and other surface authorizations, as well as the Kenai Kachemak Pipeline lease.
He said the department knew the companies wanted to close by year end, and was doing everything it could to facilitate that.
Balash told Petroleum News in a Dec. 29 email that the department had completed assignments that morning and understood the Union-Hilcorp deal would close the next day.
“We have a new operator in Cook Inlet that looks to be ready to invest in assets that still have plenty of juice in them,” he said.
In its Jan. 4 statement Hilcorp acknowledged the efforts of Chevron employees and state and federal agencies in the regulatory approval process for the sale.
Investment planned While Hilcorp did not discuss specific plans in its Jan. 4 statement, it made some general information available earlier in the year in regulatory filings.
In a narrative statement about Hilcorp’s proposed acquisition filed with the Regulatory Commission of Alaska, or RCA, in August as part of the application for transfer of pipeline interests, Hilcorp said it “has identified the Cook Inlet basin as a region holding significant potential for continued oil and gas exploration and development opportunities, and, consistent with its overall corporate mission, upon completion of the acquisition, Hilcorp intends to pursue a maintenance and development program at existing fields, as we as a comprehensive exploration program.”
Hilcorp told RCA it “is poised to begin making substantial investments in its newly acquired Cook Inlet assets over the next several years.” The company said the investment “is anticipated to lead to increased production from the underlying oil and gas assets, which should increase the useful life of these pipeline assets,” while benefitting “the broader economy in Southcentral Alaska as well as creating jobs and stimulating economic activity.”
Reputation as a good employer On its website, Hilcorp describes the company’s beginnings “as the proverbial ‘three guys and a telephone’ trying to make a living in the oil and gas business.”
Since then Hilcorp has grown to become one of the largest privately held E&P companies in the United States.
In a CEO message on Hilcorp’s website, Jeff Hildebrand, the company’s founder, president and CEO, cites “world-class employees, legacy assets and a strong balance sheet” as the reasons for the company’s success.
“We focus on what we do well,” Hildebrand said, listing the company’s core competencies as engineering and geological expertise and operational excellence.
The company’s mission, he said, is “To efficiently develop energy that would otherwise be lost while providing an enjoyable and challenging work environment where long-term personal wealth can be created.”
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