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2nd round of Cook Inlet producer changes as Hilcorp picks up MGS
Hilcorp Alaska is in the process of acquiring the Middle Ground Shoal field, cycling a Cook Inlet oil field well past its peak through to a third owner.
Platforms and facilities installed by Shell in 1964 and 1967 at the Middle Ground Shoal field in Cook Inlet were sold to Cross Timbers Oil Co. in 1998. It was a transfer from a major which had worked on initial Cook Inlet development to an independent, focused on getting more oil out of an existing field past its peak and too small to be of continuing interest to a major producer.
As Cook Inlet production continues to decline, now averaging fewer than 20,000 barrels per day compared to a peak in 1970 of more than 227,000 bpd, the basin has seen the departure not only of Shell, but more recently of Chevron subsidiary Union Oil Company of California and Marathon Oil, which sold their assets in the area to Houston-based independent Hilcorp in 2011 and 2012. ConocoPhillips Alaska, formerly ARCO Alaska, operator of the Beluga River gas field and the North Cook Inlet platform, is the only remaining original Cook Inlet operator.
XTO now exiting Cross Timbers, since renamed XTO and now an ExxonMobil subsidiary, had a goal similar to Hilcorp’s when it acquired Middle Ground Shoal in 1998: To work mature fields, which are no longer significant to major companies, and produce additional oil and gas.
The Cross Timbers’ acquisition included 100 percent interest in the two platforms, “A” and “C”, and a 50 percent interest in pipelines and onshore processing facilities 50 percent owned by Unocal. Cross Timbers said in 1998 that net production from the field was some 3,600 barrels per day. The company told Petroleum News at the time of the 1998 acquisition that Middle Ground Shoal fit criteria the company looked for, including properties with a long productive history so that production decline is more predictable.
Hilcorp agreement Hilcorp Alaska said in a July 6 statement that it has executed an agreement to purchase XTO’s Middle Ground Shoal assets and that pending state and regulatory approval the transaction was expected to close this fall. The deal includes the “A” and “C” platforms and a tank facility and offices in Nikiski.
Hilcorp said the platforms produce some 1,750 bpd of oil, and said it anticipates making employment offers to all 31 employees who currently operate the Middle Ground Shoal assets.
So what happened to Cross Timbers? When the company acquired Middle Ground Shoal it was growing rapidly. It had formed out of the 1986 acquisition of Southland Royalty Co. in a hostile takeover. Three former Southland employees raised $20 million to purchase production. By 1998 Cross Timbers had grown to market capitalization of close to three-quarters of a billion dollars, the company said.
In 2009 the company, then going by its trading symbol, XTO, was acquired by ExxonMobil for $31 billion based on XTO’s Lower 48 natural gas assets.
- KRISTEN NELSON
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