(SitNews) Ketchikan, Alaska - Governor Sean Parnell welcomed the news Saturday that Caelus Energy has entered into an agreement to purchase Pioneer Natural Resources’ Alaska subsidiary. Caelus, a privately held exploration and production company headquartered in Dallas, is expected to invest $1.5 billion in Alaska over the next six years.

"This announcement is great news for Alaskans and our economy,” Governor Parnell said. “Alaska is no longer an afterthought when companies look at places to invest. We can look forward to continued growth and more companies investing in our state. The More Alaska Production Act [SB 21] is already leading to new jobs and opportunities for Alaskans. Simply put – it’s working.”

James C. Musselman, President and CEO of Caelus Energy Alaska LLC, stated, “We are excited to enter the North Slope through the purchase of Pioneer’s assets. The current Pioneer Alaska team is very impressive and has the experience to develop the significant resource potential they have identified and help us grow the business in the future."

Musselman said, "We are attracted to Alaska because of the enormous geologic opportunity as well as the incentives, such as SB 21, that the state has put in place to encourage energy investment by independent oil and gas companies.”

However, the Alaska Democratic Party described as Orwellian the Governor's claim that the new company’s arrival is testament to the success of SB 21. The Alaska Democratic Party stated in a news release, in fact Caelus was taking advantage of a fire sale after Pioneer Natural Resources fled Alaska following passage of Parnell’s Oil Giveaway. 

Pioneer was Alaska’s first independent producer and started producing oil from the Ooguruk field under the previous oil tax system known as ACES.  On Friday, Pioneer Natural Resources announced that the Company has entered into a purchase and sale agreement with Caelus Energy Alaska LLC to sell 100% of the equity in Pioneer’s subsidiary, Pioneer Natural Resources Alaska, Inc., for cash proceeds of $550 million, subject to normal closing adjustments. The transaction has an effective date of October 1, 2013 and is expected to close by the end of the year.

The sale of Pioneer’s Alaska subsidiary is expected to result in a noncash loss of approximately $350 million which will be recorded in the fourth quarter of 2013. The financial and operating results related to Pioneer’s Alaska activities will be reflected as discontinued operations for the quarter ending December 31, 2013, and for all prior periods that will be presented in the Company’s December 31, 2013 Form 10-K. Net production from the Alaska subsidiary averaged approximately 4,000 barrels oil equivalent per day over the first nine months of 2013.

Scott D. Sheffield, Chairman and CEO of Pioneer Natural Resources, stated, “The sale of our Alaska asset will allow us to strategically redeploy capital to our core, oil-related Spraberry/Wolfcamp asset. We are currently delineating multiple prospective horizontal targets (Wolfcamp, Jo Mill and Spraberry shales) across more than 600,000 gross acres in the northern part of this asset. We believe this area holds recoverable resource potential of more than three billion barrels oil equivalent. The current drilling program for the northern Spraberry/Wolfcamp calls for an increase from five horizontal rigs during the second half of 2013 to eight horizontal rigs in 2014. With the redeployment of capital from the Alaska asset sale to the northern Spraberry/Wolfcamp, we plan to increase the horizontal rig count to ten rigs in 2014 and will ramp up this rig count faster than originally anticipated thereafter.”

Sheffield continued, “I want to personally thank all of our Alaska employees for their hard work and dedication that contributed to our success in becoming the first independent E&P company to operate on the North Slope. I am pleased that Caelus plans to build on this success.”

Pioneer entered Alaska in 2002 demonstrating the ability to effectively drill in extreme weather conditions, leading to the discovery of the Oooguruk oil field on the North Slope in 2003. Pioneer became the first independent to operate a producing field on the North Slope.

Sources of News: 

Office of the Governor
www.gov.state.ak.us

Pioneer Natural Resources Company
www.pxd.com

Caelus Energy
www.caelusenergy.com

Alaska Democratic Party
www.alaskademocrats.org

 

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