Pioneer sells Alaska holdings to Caelus Energy for $550M

Pioneer Natural Resources Co. has sold its Alaska North Slope interests to Caelus Energy LLC for $550 million in cash, the company announced Oct. 25.

The transaction between the Texas-based independents was effective Oct. 1 and will be completed by the end of the year, according to a Pioneer release.

Pioneer Chairman and CEO Scott Sheffield said in an interview in Anchorage Oct. 25 that the company has decided to focus its efforts closer to home on discoveries it has made in the West Texas Permian shale basin. He said the company hopes to invest nearly $300 billion in the major Lower 48 field and that the capital from the sale of its North Slope holdings will be transferred south immediately.

Pioneer entered the Alaska oil and gas scene in 2002 when it made discoveries in its offshore Oooguruk field west of Prudhoe Bay. The field began producing in 2008.

The company produced an average of 4,000 barrels per day in the state through the first nine months of 2013, said the release.

While Pioneer said in August it was pleased with the results fracturing produced on in-production wells in its Nuna field just onshore from Oooguruk, Sheffield said the prospect of 50 billion recoverable barrels of oil in Texas drove the decision.

Caelus President and CEO James Musselman said his company plans to expand Pioneer’s current Oooguruk operations and quickly develop the Nuna field. He called Alaska “one of the oiliest places in the world” and said the state offers ample exploration opportunities.

He will have to learn how to pronounce “Oooguruk,” an Inupiaq work for the bearded seals found in the waters off the North Slope, he added.

Musselman said he expects the company he founded in 2011 to invest about $1.5 billion in Alaska over the next five to six years.

“We have quite ambitious plans,” he said.

Pioneer’s Alaska staff will stay on board and transition to Caelus, Musselman said, with a small staff addition of current Caelus employees.

Pioneer has about 70 full-time employees in the state and contracts with up to 300 more workers during peak periods, company spokesman Casey Sullivan said.

Musselman said the opportunity to take over an operation with established staff familiar with operating in the state especially appealed to him.

Additionally, the spring passage and implementation of oil tax reform in Senate Bill 21 by the state had a direct bearing on Musselman’s decision to enter the Alaska market, he said.

His company was originally investigating the purchase of other assets in the state in late spring before the Pioneer opportunity came up, Musselman said. He added that he had not had a positive view of the climate of the state’s energy business in prior years.

“We hear every day that the major companies — ConocoPhillips, Exxon(Mobil), BP — everybody is really growing up here now because of the passage of SB 21 and that hasn’t happened in the last four or five years,” he said. “You’ve got to look at the direct correlation between the amount of activity that’s been announced and the impact SB 21 has had on that.”

Caelus is also involved in exploration in Southeast Asia, according to Musselman.

Prior to founding Caelus Musselman ran Kosmos Energy Ltd., an exploration-driven company he helped establish in 2007, he said. Since the mid-1990s he has been involved in oil exploration in Colombia and West Africa, he said.

After an Oct. 24 meeting with Gov. Sean Parnell, Musselman said he is impressed with the state’s commitment to increase private investment, but also that the effort to repeal SB 21 is a concern.

A referendum on the oil-production tax will be held in August of next year with opponents hoping to repeal the tax reform.

After 11 years in the state, Sheffield said he would miss working with Pioneer’s Alaska staff but said he is confident Musselman, someone he has known for 30 years, is the right man to take over the work.

He added that he will also miss the relationship the State of Alaska has with independent oil and gas companies and concurred with Musselman when discussing the state’s oil future.

“To remove SB 21 would be the best way to see the pipeline (throughput) continue to decline,” Sheffield said.

 

Elwood Brehmer can be reached at elwood.brehmer@alaskajournal.com.

More in News

Clem Tillion of Halibut Cove poses for a photo on Jan. 9, 2020, in Homer, Alaska. The veteran Alaska legislator was passing through Homer while waiting to take the M/V Tustumena ferry to Kodiak. (Photo by Michael Armstrong/Homer News)
Clem Tillion, PFD founder and former legislator, dies at 96

Tillion died Wedneday, Oct. 13, at Halibut Cove home.

Thunder Mountain High School on April 18.  Earlier this fall, vandalism including stolen soap dispensers and toilets clogged with foreign objects such as paper towel rolls were a problem at schools nationwide and in Juneau. But, principals say the local situation is improving. (Ben Hohenstatt / Juneau Empire File)
After brief surge, vandalism subsiding at local high schools

Principals say internet trends, stress likely behind incidents.

In this Jan. 8, 2020, photo Sen. Lisa Murkowski, R-Alaska, heads to a briefing on Capitol Hill in Washington. An Alaska man faces federal charges after authorities allege he threatened to hire an assassin to kill Murkowski, according to court documents unsealed Wed., Oct. 6, 2021. (AP Photo/J. Scott Applewhite,File)
Delta Junction man faces charges over threatening Murkowski’s life

Authorities allege he threatened to hire an assassin to kill the senator.

Donna Aderhold recites the Homer City Council oath of office and is sworn in for duty at the city council meeting on Oct. 11. (Photo by Sarah Knapp/Homer News)
New council members sworn into duty Monday

Newly-elected Homer City Council members Shelly Erickson and Jason Davis and re-elected… Continue reading

Runners participate in boys varsity race at the Ted McKenney XC Invitational on Saturday, Aug. 21, 2021, at Tsalteshi Trails just outside of Soldotna, Alaska. The trails recently reported incidents of vandalism and theft. (Photo by Jeff Helminiak/Peninsula Clarion)
Vandalism and theft reported at Tsalteshi Trails

One trail user reported stolen skis recently and multiple signs have been defaced.

At left Bonita Banks, RN, Medication Assisted Treatment (MAT) nurse at Homer Medical Center, and at right, Annie Garay, RN, Community Health Educator, pose for a photo at South Peninsula Hospital on Sept. 27, 2021, at Homer, Alaska. (Photo by Derotha Ferraro/South Peninsula Hospital)
New hospital community health educator starts

Garay, a Homer raised nurse, came home to ride out COVID-19, wound up doing pandemic nursing.

The logo for the Kenai Peninsula Borough School District is displayed inside the George A. Navarre Borough Admin Building on Thursday, July 22, 2021 in Soldotna, Alaska. (Ashlyn O’Hara/Peninsula Clarion)
Montessori school goes to universal indoor masking

As of Tuesday, eight KPBSD schools were operating with universal indoor masking for staff and students.

Commercial fishing and other boats are moored in the Homer Harbor in this file photo. (Photo by Michael Armstrong/Homer News)
Seawatch: Crabbers look at cuts to quotas

Tanner, opilio crab quotas cut on top of cancellation of fall king crab fishery.

Gavel (Courtesy photo)
Judge sides with psychiatrists who alleged wrongful firing

Two psychiatrists said they were wrongfully fired when Alaska Gov. Mike Dunleavy took office.

Most Read