Hilcorp announces plan to buy Eni's oil fields on Alaska's North Slope (2024)

Hilcorp Energy Co. said on Wednesday it has struck a deal to buy the Alaska assets of the Italian oil companyEni SpA.

Eni’s Alaska assets, the Oooguruk and Nikaitchuq oil fields, together produce about 22,000 barrels per day.

Hilcorp, a privately held independent producer that came to Alaska only a little over a decade ago, is now one of two major operators in the state. The deal with Eni gives it an even bigger hold on the North Slope, where it has been operating the nation’s largest oil field for the past four years.

“In 2024, Hilcorp Alaska proudly made its largest-ever budget commitment to the state, and we are excited to further expand our presence on the Slope with this acquisition. Drawing from our extensive experience and expertise gained at Milne Point and Prudhoe Bay, we are fully prepared to leverage our knowledge to drive success at Oooguruk and Nikaitchuq,” Greg Lalicker, Hilcorp’s chief executive officer, said in a statement released by the company.

“The addition of the Oooguruk and Nikaitchuq assets seamlessly integrates with Hilcorp Alaska’s existing portfolio, presenting us with an exceptional opportunity to invest and optimize operations in a way that will drive increased production,” Lalicker said.

Texas-based Hilcorp is already Alaska’s biggest oil field operator and the second-largest oil producer, with net production of about135,000 barrels per day. ConocoPhillips remains the largest oil producer and leaseholder, with net production of about195,000 barrels per day.

TheNikaitchuqandOoogurukoil fields are located offshore in shallow Beaufort Sea water within state territory.

Hilcorp’s acquisition of Oooguruk and Nikaitchuq must be cleared by state regulators. In a prepared statement, John Boyle, commissioner of the Alaska Department of Natural Resources, responded positively to the announcement but said that a review by the department is forthcoming.

“The Department is encouraged to hear that existing major operators are looking to expand their North Slope holdings and investments. We have appreciated ENI’s record of positive performance and investment in Alaska, and look forward to these assets being actively developed under potential new ownership,” Boyle said in the statement.

Hilcorp, one of the nation’s largest independent oil companies, wasfounded in 1989by Jeffery Hildebrand of Houston. It beganits Alaska businessin 2011 and 2012, when it bought Cook Inlet assets fromChevronandMarathon. Hilcorp is now the dominant Cook Inlet operator, by far, controlling about 90% of the leases and production there.

Hilcorp began its North Slope operationsin 2014, when it bought all of BP’s shares of the Endicott andNorthstarfields and half of BP’s shares of the Milne Point and the yet-to-be developed Liberty field. As a result of that transaction, estimated atup to $1.5 billion, Hilcorp became theoperatorof those fields.

Hilcorp’s North Slope expansion continued in 2020 when it bought out all remaining BP Alaska assets as the British oil giant departed the state. That $5.6 billion deal made Hilcorp the operator of the Prudhoe Bay field and its satellites. TheGreater Prudhoe Bay Areacomprises the largest North American oilfield.

Hilcorp specializes in revitalizing aged oil and gas assets, and it has been notably successful at some Alaska fields. At Milne Point, it has nearly tripled production from18,400 barrels per daywhen it took over operations to about 50,000 barrels per day now.

Part of the success at Milne Point is attributed to new technology for what’s known as “polymer flooding” used in partnership with the U.S. Department of Energy and experts from theUniversity of Alaska Fairbanks. Hilcorp in 2018 beganinjectingspecialized polymer chemical compounds into the oil reservoir to increase production of heavy oil; it was theNorth Slope’s first successful use of polymer floodingfor enhanced recovery.

Lalicker and Luke Saugier, Hilcorp’s senior vice president for Alaska, said they hope to extend the company’s success at Milne Point to the fields being acquired from Eni.

“Drawing from our extensive experience and expertise gained at Milne Point and Prudhoe Bay, we are fully prepared to leverage our knowledge to drive success at Oooguruk and Nikaitchuq,” Saugier said in the statement. “I am also excited about our long-term prospects in Alaska, as we continue to play a vital role in the economy and community, while ensuring the safe and responsible development of Alaska’s natural resources.”

Hilcorp’s dramatic ascent in Alaska has sparked some controversy because of the company’s size and corporate structure.

There have beeneffortsin the Legislature to change the state tax law so that Hilcorp would start paying state corporate income taxes. So far, those attemptshave not been successful.

The tax situation exists because the company is structured as an S-corporation, a term in the tax code for companies whose profits flow directly to shareholders, rather than as a stand-alone C-corporation, as is typical for publicly traded companies like ConocoPhillips and BP.

Applying the corporate tax to Hilcorp would bring in more than $100 million a year to the state, according to a 2023estimatefrom the Department of Revenue.

Hilcorp’s status as a privately held company with confidential financial information has also been the source of controversy. Hilcorp’s financial confidentiality contrasts with the status of publicly traded companies like BP, which must make financial information accessible.

The city of Valdez and other parties havetried to win accessto Hilcorp’s financial information, arguing that the public has a right to know whether the company has the wherewithal to respond to disasters and otherwise operate safely. In May, the state Supreme Court issued a ruling thatpartially validatedValdez’s position. The city’s legal attempt to wrest information from Hilcorp is continuing.

Hilcorp has also racked up a series of penalties for safety and operational violations at the oil fields it manages, includingat Prudhoe Bayandat Milne Point.

Correction: The spelling of Luke Saugier’s last name has been corrected.