Pacific Energy Resources Ltd. announced that it has completed the acquisition of Forest Oil Corp.'s and Forest Alaska Holding's Alaska oil and gas properties for $400 million, 10 million shares of Pacific Energy common stock and a seven-year seller note to Forest with a net present value of approximately $30 million.
Long Beach, CA-based Pacific Energy acquired 100% of the membership interests in Forest Alaska Operating LLC, which owns the majority of the Alaska properties and operations, plus certain additional Alaska assets owned by Forest, including a 50% interest in the Cook Inlet Pipe Line. Assets transferred include nine fields in the Cook Inlet area which produce approximately 5,000 boe/d and nearly one million acres covering multiple exploration prospects. DeGolyer & MacNaughton recently estimated that the properties held 60.6 MMboe (26.1 MMboe of net proved reserves, 27.8 MMboe net probable reserves and 6.72 MMboe of possible reserves).
"This package of assets is a direct extension of our business strategy; the established production, with long-life reserves, generates strong predictable cash flow," said Pacific Energy President Darren Katic. "The multiple infill drilling opportunities provide a low-risk means to grow [Pacific Energy's] production through redevelopment. Significant undeveloped acreage with multiple high-quality exploration targets, provides large exploration upside."
When the deal was first announced in May, Pacific Energy said it would pay an estimated $448 million and 5.5 million shares for Forest's Alaskan subsidiary, an interest in Cook Inlet Pipe Line Co. and the acreage (see NGI, June 4).
Forest in January said it would sell its Alaska business unit, which is one of its five core operating businesses, to help pay for its $1.6 billion purchase of The Houston Exploration Co. (see NGI, Jan. 15).
Pacific Energy currently operates onshore assets that consist of seven oil and natural gas fields in the Los Angeles and San Joaquin basins. The properties have about 170 operating wells averaging 850 boe/d. Pacific Energy also has a participation agreement with Shell Oil Co. and Wolverine to explore and develop a 99,000-acre area in the Green River Basin of Wyoming.
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