Hilcorp announces plan to buy Eni’s oil fields on Alaska’s North Slope

Hilcorp’s Alaska office successful Midtown Anchorage are seen connected Feb. 7. The company, now a ascendant usability successful Alaska, announced it has struck a woody to grow its North Slope holdings by buying Eni’s Alaska assets. (Photo by Yereth Rosen/Alaska Beacon)

Hilcorp Energy Co. said connected Wednesday it has struck a woody to bargain nan Alaska assets of nan Italian lipid company Eni SpA.

Eni’s Alaska assets, nan Oooguruk and Nikaitchuq lipid fields, together nutrient astir 22,000 barrels per day.

Hilcorp, a privately held independent shaper that came to Alaska only a small complete a decade ago, is now 1 of 2 awesome operators successful nan state. The woody pinch Eni gives it an moreover bigger clasp connected nan North Slope, wherever it has been operating nan nation’s largest lipid section for nan past 4 years.

“In 2024, Hilcorp Alaska proudly made its largest-ever fund committedness to nan state, and we are excited to further grow our beingness connected nan Slope pinch this acquisition. Drawing from our extended acquisition and expertise gained astatine Milne Point and Prudhoe Bay, we are afloat prepared to leverage our knowledge to thrust occurrence astatine Oooguruk and Nikaitchuq,” Greg Lalicker, Hilcorp’s main executive officer, said successful a connection released by nan company.

“The summation of nan Oooguruk and Nikaitchuq assets seamlessly integrates pinch Hilcorp Alaska’s existing portfolio, presenting america pinch an exceptional opportunity to put and optimize operations successful a measurement that will thrust accrued production,” Lalicker said.

Texas-based Hilcorp is already Alaska’s biggest lipid section usability and nan second-largest lipid producer, pinch nett accumulation of about 135,000 barrels per day. ConocoPhillips remains nan largest lipid shaper and leaseholder, pinch nett accumulation of about 195,000 barrels per day.

The Nikaitchuq and Oooguruk oil fields are located offshore successful shallow Beaufort Sea h2o wrong authorities territory.

Hilcorp’s acquisition of Oooguruk and Nikaitchuq must beryllium cleared by authorities regulators. In a prepared statement, John Boyle, commissioner of nan Alaska Department of Natural Resources, responded positively to nan announcement but said that a reappraisal by nan section is forthcoming.

“The Department is encouraged to perceive that existing awesome operators are looking to grow their North Slope holdings and investments. We person appreciated ENI’s grounds of affirmative capacity and finance successful Alaska, and look guardant to these assets being actively developed nether imaginable caller ownership,” Boyle said successful nan statement.

Hilcorp, 1 of nan nation’s largest independent lipid companies, was founded successful 1989 by Jeffery Hildebrand of Houston. It began its Alaska business in 2011 and 2012, erstwhile it bought Cook Inlet assets from Chevron and Marathon. Hilcorp is now nan ascendant Cook Inlet operator, by far, controlling astir 90% of nan leases and accumulation there.

Hilcorp began its North Slope operations in 2014, erstwhile it bought each of BP’s shares of nan Endicott and Northstar fields and half of BP’s shares of nan Milne Point and nan yet-to-be developed Liberty field. As a consequence of that transaction, estimated at up to $1.5 billion, Hilcorp became the operator of those fields.

Hilcorp’s North Slope description continued successful 2020 erstwhile it bought retired each remaining BP Alaska assets arsenic nan British lipid elephantine departed nan state. That $5.6 cardinal woody made Hilcorp nan usability of nan Prudhoe Bay section and its satellites. The Greater Prudhoe Bay Area comprises nan largest North American oilfield.

A motion extracurricular a Midtown Anchorage agency building, seen connected Wednesday, displays nan logo of Eni, an Italian lipid institution group to waste its Alaska assets to Hilcorp Energy Co. (Photo by Yereth Rosen/Alaska Beacon)

Hilcorp specializes successful revitalizing aged lipid and state assets, and it has been notably successful astatine immoderate Alaska fields. At Milne Point, it has astir tripled accumulation from 18,400 barrels per day when it took complete operations to astir 50,000 barrels per time now.

Part of nan occurrence astatine Milne Point is attributed to caller exertion for what’s known arsenic “polymer flooding” utilized successful business pinch nan U.S. Department of Energy and experts from the University of Alaska Fairbanks. Hilcorp successful 2018 began injecting specialized polymer chemic compounds into nan lipid reservoir to summation accumulation of dense oil; it was the North Slope’s first successful usage of polymer flooding for enhanced recovery.

Lalicker and Luke Saguier, Hilcorp’s elder vice president for Alaska, said they dream to widen nan company’s occurrence astatine Milne Point to nan fields being acquired from Eni.

“Drawing from our extended acquisition and expertise gained astatine Milne Point and Prudhoe Bay, we are afloat prepared to leverage our knowledge to thrust occurrence astatine Oooguruk and Nikaitchuq,” Saguier said successful nan statement. “I americium besides excited astir our semipermanent prospects successful Alaska, arsenic we proceed to play a captious domiciled successful nan system and community, while ensuring nan safe and responsible improvement of Alaska’s earthy resources

Hilcorp’s melodramatic ascent successful Alaska has sparked immoderate contention because of nan company’s size and firm structure.

There person been efforts in nan Legislature to alteration nan authorities taxation rule truthful that Hilcorp would commencement paying authorities firm income taxes. So far, those attempts have not been successful.

The taxation business exists because nan institution is system arsenic an S-corporation, a word successful nan taxation codification for companies whose profits travel straight to shareholders, alternatively than arsenic a stand-alone C-corporation, arsenic is emblematic for publically traded companies for illustration ConocoPhillips and BP.

Applying nan firm taxation to Hilcorp would bring successful much than $100 cardinal a twelvemonth to nan state, according to a 2023 estimate from nan Department of Revenue.

Hilcorp’s position arsenic a privately held institution pinch confidential financial accusation has besides been nan root of controversy. Hilcorp’s financial confidentiality contrasts pinch nan position of publically traded companies for illustration BP, which must make financial accusation accessible.

The metropolis of Valdez and different parties have tried to triumph access to Hilcorp’s financial information, arguing that nan nationalist has a correct to cognize whether nan institution has nan wherewithal to respond to disasters and different run safely. In May, nan authorities Supreme Court issued a ruling that partially validated Valdez’s position. The city’s ineligible effort to wrest accusation from Hilcorp is continuing.

Hilcorp has besides racked up a bid of penalties for information and operational violations astatine nan lipid fields it manages, including at Prudhoe Bay and at Milne Point.