AJOC EDITORIAL: Poo-pooing the news, part 2

It was noted in this space a few weeks ago that Democrats never let good news go to waste, and they remain nothing if not predictable.

Barely an hour after BP announced it was selling some of its smaller North Slope assets to Hilcorp Energy on April 22, the reliable Sen. Hollis French was out with a press release accusing BP of fattening its bottom line by exiting Alaska after lobbying for the oil tax reform that passed the Legislature in 2013.

Right, Senator, that was BP’s plan all along: Campaign for years for a fair tax regime, then sell its smallest producing assets just four months after it takes effect. Brilliant!

French and his fellow Democrats have been telling us that Senate Bill 21 only favors the Big 3 producers ConocoPhillips, BP and ExxonMobil, yet, as usual, the facts give lie to their incessant babble.

Since SB 21 passed, we have seen the privately-held independent Caelus, backed by billion-dollar private equity firm Apollo, buy into the Slope to the tune of $300 million for Pioneer Resources fields.

BP revealed on an investor call that Hilcorp paid $1.25 billion for the Slope assets with a $250 million earn-in commitment to advance the Liberty field project.

That is $1.8 billion in investments by new entrants to the Slope, and when combined with the new projects announced by the Big 3 over the past year, more than $7 billion worth of purchases and development decisions have been made after the passage of oil tax reform.

The 1.8 percent annual decline for Slope production this fiscal year is easily the slowest rate in years, with production better than forecast by 13,600 barrels per day.

Democrats should be celebrating Hilcorp’s entry to the Slope given its outstanding track record in Cook Inlet, where it has nearly doubled oil production and secured local utilities’ gas needs into 2018. Hilcorp’s remarkable performance in Cook Inlet has allowed the ConocoPhillips LNG plant at Nikiski to resume exports, providing markets for Hilcorp plus other producers and explorers in the region.

Hilcorp turned around the Inlet situation by taking over neglected assets of Chevron and Marathon, and there should be little doubt that the company has done its due diligence on the Slope and believes it will be able to increase production from existing assets and produce new oil from Liberty in partnership with BP.

A proven company like Hilcorp entering the Slope is a good thing, but the Democrats seem determined to make it a decision the company will regret as their party pushes its dishonest and destructive campaign to repeal oil tax reform.

05/08/2014 - 11:09am