Pacific Energy Signs Deal for Majority Stake in Beta Unit
Pacific Energy Resources Ltd. said that it has signed a definitive purchase and sale agreement with Aera Energy LLC regarding the sale of its 71% interest in the Beta Unit, offshore California. Before the acquisition is completed, Pacific must satisfy a number of financial and regulatory requirements.
Netherland Sewell & Associates estimates that the unit’s proved reserves as of May 1, 2006, totaled 19.78 million barrels of 14-degree API oil and 3.23 Bcf of gas. It also estimated 11.61 million barrels of probable oil reserves, 1.93 Bcf of probable gas reserves, 31.26 million barrels of possible oil reserves, and 4.84 Bcf of possible gas reserves. These estimates are based on a forecasted price scenario and have PV10% values of $193.90 million, $89.29 million, and $121.14 million for proved, probable, and possible reserve categories, respectively.
The Beta Oil Field is located in the San Pedro area in federal waters 9 miles offshore Long Beach, Calif. The leases in question are POCS 300, 301, and 306. A complex of two production platforms (Eureka and Ellen) and a facilities platform (Elly) handle production from these leases. Platform Edith, also in the Beta Oil Field in lease POCS 296, is neither owned nor operated by Aera and is not included in this acquisition.
Shell Oil Co. discovered the Beta Field in 1976. Production started in 1981 from Platform Ellen. Production began on Platform Eureka in 1985. Peak production from the Beta Field was 20,800 barrels of oil per day in 1986. Cumulative production through 2004 for platforms Ellen and Eureka is estimated at 78 million barrels. Eureka accounted for nearly 38 million barrels of oil from 1985 until the production was idled in 1999, at which time it was averaging more than 4,400 barrels of oil per day. Aera and its predecessor companies have operated and maintained platforms Eureka, Ellen, and Elly since they were installed in the 1980s. Currently, production from the Beta Unit (Platform Ellen) is approximately 2,100 BOE/day.
As part of the acquisition process, Pacific Energy is required to submit to certain federal, state, and local regulatory governmental agencies executed transfer documents and other regulatory compliance forms sufficient to allow it to own and operate those certain federal oil and gas leases, platforms, facilities, equipment, pipelines, rights-of-way, permits, and licenses that are part of the Beta Oil Field. The Minerals Management Service (MMS), Pacific OCS Regional Office in Camarillo, Calif., is the primary federal regulatory agency responsible for the management of federal lands, subsoil and seabeds located on the Outer Continental Shelf off of the California coast.
In connection with the filing of the requisite transfer documents and compliance forms, Pacific Energy will submit lease development bonds, a right-of-way bond, supplemental abandonment bonds, and other securities acceptable to the MMS in an amount in excess of $128 million along with certificates of financial responsibility evidencing insurance coverage of $35 million. The company will also submit additional bonds and certificates of insurance to the applicable state and local agencies having regulatory authority over state lands offshore of the California coast and other state and public lands onshore located in the Long Beach area.
Pacific Energy Resources is a Long Beach-based oil and gas exploration and development company.
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