Tennessee firm buys Pacific Energy Alaska assets

By OGJ editors
HOUSTON, Dec. 17
-- A unit of Miller Petroleum Inc., Huntsville, Tenn., has purchased the Alaska Cook Inlet assets of bankrupt Pacific Energy Resources Ltd., Long Beach, Calif., and plans to boost production.

Miller Petroleum, which vied with several other firms to acquire the properties, said the transaction brings it proved reserves of 5.6 million bbl of oil and 3.7 bcf of natural gas. Proved, probable, and possible reserves total 13.2 million bbl of oil and 15.5 bcf of gas. It estimated the production capacity at 280 b/d.

Consideration is $2.25 million plus another $2.22 million for contract cure payments, bonds, and other local, federal, and state requirements to operate the facilities.

Pacific Energy acquired the assets in 2007 from Forest Oil Corp. for $464 million, filed bankruptcy last March, and abandoned the assets in September.

Miller Petroleum’s Miller Energy Resources unit on Dec. 10 acquired 100% of the membership interests of Cook Inlet Energy LLC, an Alaska limited liability company, from its members. Miller Energy issued the sellers warrants to buy 3.5 million shares of Miller Petroleum common stock plus $250,000 and certain expense related to the acquisition.

The acquisition includes land and offshore production and processing facilities, more than 600,000 net acres of land, thousands of acres of 3D seismic data, roads, pads, and other facilities, all of which cost nearly $300 million to build and install in the last 5 years.

Miller will operate the facilities through Cook Inlet Energy, whose operating team has managed the assets since early 2000.

The facilities are about 65 miles southwest of Anchorage. Included are the West McArthur River Unit, Redoubt Unit, and other assets at Kustatan, West Foreland, Three Mile Creek, Sabre, and Valkyrie.

Before the acquisition, Miller Petroleum had reserves of 504 million boe and 54,506 net acres in the Appalachian basin in Tennessee, where it holds interests in more than 600 wells.

Other bidders for the Pacific Energy Resources assets were the Ramshorn Investments Inc. affiliate of Nabors Industries Inc. and Stellar Energy LLC of Delaware.

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