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Buccaneer seeks auction of Alaska assets

  • Author: Eric Lidji
  • Updated: September 29, 2016
  • Published July 4, 2014

Buccaneer Energy Ltd. wants to hold an auction later this summer to sell its Alaska assets as part of ongoing bankruptcy proceedings for the company and its subsidiaries.

The Australian independent has asked the U.S Bankruptcy Court for the Southern District of Texas to schedule an auction in Houston, Texas, starting the morning of Aug. 4.

The court is set to hold a hearing on the matter on July 8.

According to Buccaneer, AIX Energy LLC has agreed to be the "stalking horse bidder" for the auction, purchasing "substantially all" of Buccaneer's assets for an aggregate price of $58,476,264.71. A stalking horse bidder makes an initial bid in a bankruptcy auction as a way to ensure that the seller gets a certain minimum value for its assets.

AIX Energy is one of the largest creditors in the proceedings.

Under the structure proposed by Buccaneer, interested buyers would submit bids and a $3 million "good faith" deposit by 3 p.m. central time on July 30. If Buccaneer gets more than one bid, it would begin an auction starting Aug. 4. If Buccaneer gets no bids, the company would ask the court to approve the sales agreement with AIX Energy.

Buccaneer and its eight subsidiaries filed for bankruptcy protection on May 31 after amassing Cook Inlet properties and assets faster than it could produce revenues.

Includes various assets

The most immediately valuable Buccaneer property in Alaska is probably the producing Kenai Loop gas field and its associated facilities and pipelines, although the onshore Cook Inlet field is currently tied up in legal disputes with neighboring landowners over correlative rights. The sale would include seven Kenai Loop leases. Of those, four are State of Alaska leases that expired retroactively when the Alaska Department of Natural Resources denied a unit at the field, a decision Buccaneer is in the process of appealing. Of the other three, two are Alaska Mental Health Land Trust leases held by current production and one is a Cook Inlet Region Inc. lease listed as "pending litigation."

The sale would also include the farm-out Buccaneer previously made on the deep oil rights at the five leases at the ConocoPhillips-operated North Cook Inlet unit.

Buccaneer still owns six leases at the terminated West Eagle unit in the southern Kenai Peninsula, although four expire on Oct. 1. (The other two expire in March 2018).

The sale would also cover a scattering of leases across Cook Inlet, including one at the West Nicolai prospect, set to expire in March 2018; one at the former Northwest Cook Inlet unit, set to expire in February 2018; four at the former Southern Cross unit (two of which Buccaneer owns only 50 percent working interest), set to expire in October 2014; and a overriding royalty interest on seven leases at the Cosmopolitan prospect.

The sale also includes six wells. Those are the four wells at the Kenai Loop field (the producing Kenai Loop No. 1-1 and No. 1-3, the Kenai Loop No. 1-2 disposal well and the Kenai Loop No. 1-4, which is shut-in due to the legal dispute at the field), and the plugged and abandoned West Eagle No. 1 and Southern Cross No. 1 wells.

So far, the sale advisor, Global Hunter Securities LLC, has already started marketing the assets to "a targeted group of interested parties," according to a June 20 filing.

This story originally appeared in Petroleum News and is republished here with permission.

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