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Miller Energy Resources, Inc. Message Board

  • mikemint1 mikemint1 Nov 8, 2012 8:27 AM Flag

    Hilcorp

    Hilcorp had some issues with the acquisition of Marathon´s assets related with Alaska antitrust law´s allegations.

    A consent decree was signed between State of Alaska and Hilcorp. They fixed the price of gas for the next 5 years. An important issue taking into account that Hilcorp will have a 70% market share.

    Miller will need another buyer.

    State of Alaska
    Department of Law
    Search for Hilcorp / Consent Decree.

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    • State deal with Hilcorp will cap gas prices, limit sales for LNG

      Tim Bradner, Alaska Journal of Commerce

      Cook Inlet gas producer Hilcorp Energy LLC has agreed to terms of a consent decree that will cap the price of gas sold to utilities and industrial customers for five years and not allow gas to be sold into LNG export markets until local utility needs are met, a state attorney said Thursday.

      The consent decree, if agreed to by an Alaska Superior Court, will clear the way for Hilcorp to complete its acquisition of Marathon’s Alaska assets, most likely in early January.

      Assistant State Attorney Ed Sniffen said the decree applies only to Hilcorp and not to Marathon. Even though the decree is not yet in effect, Hilcorp agreed Wednesday to abide by its terms between now and the time it is approved, Sniffen said.

      The U.S. Federal Trade Commission meanwhile agreed to drop its own investigation of the Marathon-Hilcorp sale and has deferred to the state of Alaska and the pending consent decree, the FTC said in an announcement Wednesday.

      The parallel federal and state investigations have been under way for most of 2012. Sniffen said the state of Alaska is are concerned because Marathon and Hilcorp today produce about 70 percent of the Cook Inlet gas sold to regional utilities, and having that much production controlled by one company could put utilities at a disadvantage in negotiations.

      Terms of the proposed decree will be made public when notices are published, probably early next week. The court will take comments from the public and interested parties for 60 days. Following that, a state Superior Court hearing will be held and a decision made on the consent decree he said.

      Final resolution of the matter will likely come in January, clearing the way for the Marathon asset sale, Hilcorp spokeswoman Lori Nelson said. Marathon disclosed last month to investors that the Cook Inlet assets were sold to Hilcorp for $375 million.

      Sniffen said the deal freeze gas prices sold by Hilcorp to utility and industrial customers at prices existing when the decree is official, likey in January, but those prices are expected to be similar to the average price of Cook Inlet gas today, about $6.52 per mcf, Sniffen said.

      The deal has an escalator allowing a 4 percent annual increase, he said, and this would likely result in an allowable price of about $7.72 per mcf at the end of five-year period in 2017, he said.

      “This was a very difficult balancing act for us because we want to protect the local consumers and at the same time give Hilcorp enough of a price incentive to explore for gas,” Sniffen said.

      The provision prohibiting Hilcorp from selling gas for export as LNG until local utility needs are met also applies to sales to companies “who intend to resell the gas for LNG export,” Sniffen said.

      This issue may be moot if ConocoPhillips, which owns and LNG plant near Kenai, south of Anchorage, fails to renew the LNG export license for the plant that is due to expire next March.
      Sniffen said the state has not been informed by ConocoPhillips of any plans to apply for a renewal, but if an application is made it would likely come in January, he said.

      There is increasing sensitivity to the Cook Inlet gas supply situation because existing fields are declining in production and local utility demand is expected to exceed annual production by the 2014-15 winter, requiring gas to be imported as LNG or compressed natural gas, utility officials told the state regulatory commission in a recent briefing.

      Several companies are exploring for oil and gas in Cook Inlet but no major discoveries have been made yet. Even if they are it is unlikely they can be put into production in time to meet the projected 2014-15 shortfall.

      • 1 Reply to mikemint1
      • Nov 28, 2012 - 03:35 PM AKST
        Hilcorp boosts oil in 2012, gas continues drop
        TIM BRADNER, ALASKA JOURNAL OF COMMERCE
        Hilcorp Energy has been able to rebuild Cook Inlet oil production since taking over ownership of producing properties in early 2012, but natural gas production continues to fall in fields the company has interests in, according to information made available by the company.

        “It is not coincidental that fields where we are seeing increases are those we operate and fields we are seeing declines are fields where we are not the operator, or are in partnership,” Hilcorp spokeswoman Lori Nelson said.

        Hilcorp feels some of the other companies operating in the Inlet could be more aggressive in controlling costs, she said.

        Oil production in four Cook Inlet fields where Hilcorp is owner and operator has increased from about 6,500 barrels per day last January, when Chevron transferred ownership, to nearly 8,000 barrels per day in November, the data indicates.

        Hilcorp president Greg Lalicker presented some of the information at the Resource Development Council’s annual conference Nov. 14.

        The bulk of the increase is a resulted of an aggressive program of well workovers and repairs initiated by Hilcorp. The company has spent about $230.7 million in 2012.

        There was a 122 percent increase of oil output from the small Swanson River field, Alaska’s first commercial oilfield that was discovered in 1957 and has been producing since 1959.

        McArthur River, Cook Inlet’s largest oil field, has seen a 8 percent increase since Hilcorp took over. Granite Point, the second largest in the Inlet, is up 27 percent. The Trading Bay field is up 36 percent.

        The picture is different with natural gas, however. Hilcorp’s overall net gas production is slightly down for the January-through-November period to about 6,000 thousand cubic feet, or mcf, per day but the three largest fields the company has interests in are showing declines.

        The Beluga River field, in which Hilcorp has a one-third interest and is operated by ConocoPhillips, gas production is down 11 percent since January.

        The Marathon-operated Nilnilchik field, in which Hilcorp has a 40 percent interest, is down 6 percent in gas production. Trading Bay, where Marathon also is operator, has seen gas production drop by 33 percent.

        The only significant gas field that has shown an increase has been Deep Creek, which has more than doubled its production.

        Hilcorp and Marathon have signed an agreement for Marathon to sell its Inlet gas production assets to Hilcorp for $375 million and the transaction is expected to close after January, following approval by a state court judge on a Consent Decree signed by Hilcorp with the state.

        Hilcorp plans to invest $50 million in the properties being acquired from Marathon on 2013, Nelson said, along with $150 million to $200 million in the other Inlet properties.

        The state had antitrust concerns with the acquisition because in purchasing Marathon’s properties Hilcorp will own 70 percent of Cook Inlet gas production. In the Consent Decree Hilcorp agreed not to increase its prices for gas sold to utilities for five years except for a 4 percent annual escalator that essentially adjusts for inflation. The company is also barred from selling gas to a LNG export market until local utility needs are met.

        Alaska journal of Commerce

    • Buccaneer with a lot of problems too.

      "A buccaneer's dream

      During an Oct. 25th public meeting at McNeil Canyon School, Buccaneer Alaska's Mark Landt shared his dream for coming years. Strike it rich offshore and onshore. Drill more wells. Build roads and other infrastructure all over the West Eagle leases. Run a pipeline across the Anchor River toward Nikolaevsk. Keep East End Road busy with related truck traffic.

      It was the single heartfelt response to questions during two nights of long overdo public meetings.

      Someone at McNeil Canyon said Mark's dream was her worst nightmare. Most folks expressed misgivings during Buccaneer's meetings over the way industrialization would change our communities and over Buccaneer's apparent incompetency and lack of candor. Most questions went unanswered. Whatever the issue, from when the rig "Endeavour" might leave Kachemak Bay to where water for drilling West Eagle would come from, there was dithering and evasion.

      Can it be that Buccaneer actually doesn't know the answers or was it just unwillingness to tell the truth?

      Oil and gas is a risky business. It takes the best technology, know-how, preparedness and decisiveness in the face of the unexpected to avoid catastrophe. All seem beyond Buccaneer. That places everyone, from stockholders and workers to Kachemak Bay area residents, at unacceptable risk.

      The Alaska Departments of Fish and Game, Environmental Conservation, and Natural Resources are supposed to require oil and gas companies to comply with laws and regulations that reduce risk, protect our resources and avoid harm to local people. Unfortunately, except for DEC's refusal to let Buccaneer drill off Anchor Point on an upper Cook Inlet contingency plan, the agencies seem too timid to do their jobs. Instead, they've bent the rules and turned a blind eye to Buccaneer's disrespect for the law.

      Kachemak Bay, its watershed and Lower Cook Inlet are uniquely valuable resources deserving of protection from pollution and habitat destruction. Our local communities and economy depend upon them. We count on state agencies to protect us from incompetent companies and ill-advised resource extraction schemes. When officials fail to do their jobs, it's up to citizens to organize, raise a fuss and hold them accountable.

      Mike O'Meara"

      Look for Homer News. Interesting comments

      • 1 Reply to mikemint1
      • Buccaneer sells more Kenai Loop gas

        Australia’s Buccaneer Energy has signed a new gas sales agreement as it also announced a rise production from its Kenai Loop-1 in Alaska’s Cook Inlet.
        Buccaneer said it had signed an agreement with an unnamed third party to sell 500,000 cubic feet of gas per day at $15 per Mcf for the period up until 31 December.

        It added that there could be the ability to extend the contract or increase deliveries depending on the unnamed buyer’s requirements.

        The company already has a sales agreement with another third party that sees it sell about 1 million cubic feet of gas per day at a price of $7.50 per Mcf.

        That agreement started on 15 October and is scheduled to run until 15 December, however Buccaneer revealed on Friday that the buyer had agreed to increase the price under the agreement to $15 per Mcf, effective as of 14 November.

        Once both short-term contracts are complete, Buccaneer’s additional supply will be delivered to local gas utility Enstar and be priced using the daily auction pricing process.

        Buccaneer also announced on Friday that output from its wholly-owned Kenai Loop-1 well had increased to 6.5 MMcfd, adding that additional production rate increases would be considered once testing of the Kenai Loop-4 well had been completed.

 
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