Pioneer to sell Alaska subsidiary for $550 million

Dallas-based independent Pioneer Natural Resources Co. has agreed to sell its equity in subsidiary Natural Resources Alaska Inc. to privately held Caelus Energy Alaska LLC, Dallas, for $550 million. The purchase and sell agreement is expected to close by yearend.

“The sale of our Alaska asset will allow us to strategically redeploy capital to our core, oil-related Spraberry-Wolfcamp asset,” stated Scott D. Sheffield, Pioneer chairman and chief executive officer. “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.”

Sheffield added the company’s drilling rig program for the northern Spraberry-Wolfcamp—which currently dictates an increase from 5 horizontal rigs during this year’s second half to 8 horizontal rigs in 2014—could reach 10 horizontal rigs in 2014 before the rig count is expanded more rapidly than previously anticipated. The company announced its plans to horizontally drill the lower Wolfcamp in fourth-quarter 2010 (OGJ Online, Oct. 29, 2010).

In August, Sheffield told attendees at the Unconventional Resources Technology Conference (URTeC) in Denver: “The Spraberry-Wolfcamp could possibly become the largest oil and gas discovery in the world.” PNR holds 900,000 gross acres (730,000 net acres) in the Spraberry field, making it the largest acreage holder (OGJ Online, Aug. 12, 2013). The company estimates the area holds recoverable resource potential of 3 billion boe.

In 2005, PNR announced its intent to pursue divestment of properties in the deepwater Gulf of Mexico and southern Argentina's Tierra del Fuego, while expanding its development drilling programs in several fields including the Spraberry (OGJ Online, Sept. 2, 2005).

A year later, PNR sold its Tunisian oil and gas properties to OMV AG for $866 million to reinvest into the Spraberry and Eagle Ford (OGJ Online, Jan. 6, 2011). In June, the company sold 40% of its interest in the southern portion of Spraberry to Sinochem Group for $1.7 billion. PNR retained 60% interest in the Wolfcamp assets and continued as operator (OGJ Online, June 3, 2013).

In September 2012, PNR announced its plans to open a data room that October as it attempted to sell its Barnett assets so the company could reallocate capital to the Spraberry vertical play, the horizontal Wolfcamp play, and the Eagle Ford (OGJ Online, Sept. 18, 2012).

PNR expects a fourth-quarter loss of $350 million as a result of the sale. In the first 9 months of this year, Natural Resources Alaska averaged 4,000 boe/d of net production.

James C. Musselman, Caelus Energy Alaska’s president and chief executive officer, 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.”