Pacific Energy Updates on Heavy Lift Vessel Contract, Corsair Leases

As previously announced, Pacific Energy Resources submitted to the State of Alaska a conditional contract as evidence of a heavy lift vessel required to transport a jackup rig to the Cook Inlet, Alaska, in time for the 2009 drilling

In order for the contract to become effective, the Company and a third party requested the extension of certain Corsair leases for a period of up to two years as well as reinstating some previously expired Corsair leases. Corsair is a natural gas and oil exploration prospect in the Cook Inlet.

The State of Alaska, Department of Natural Resources, Division of Oil and Gas has denied the Company’s request and stated it has placed the Company’s leases in default subject to a 90 day cure period. The denial was based on the grounds that the conditions for the contract to become effective were unacceptable for the following reasons:

  • the Department of Natural Resources does not have the authority to extend the leases or otherwise reinstate certain leases;
  • the contract did not specify departure date for the heavy lift vessel; and
  • a lack of a meaningful deposit made with the signing of the conditional contract.

The Company intends to file an administrative appeal with the Commissioner of the Department of Natural Resources on or before December 20, 2008. In addition, prior to March 1, 2009, the Company may elect to cure the default by submitting a signed heavy lift contract which satisfies the Department of Natural Resources’ concerns.