PINEDALE – UP Energy confirmed to the Roundup that it has acquired Pinedale Energy Partners’ assets in the Pinedale Anticline on Friday, April 30.
This information was confirmed to the Roundup by UP Energy representative Kelly Bott. Neither UP Energy nor Pinedale Energy Partners Operating issued a press release.
“With this consolidation of assets, we are able to further streamline operations with a focus on safety and environmental diligence,” Bott told the Roundup. “UP Energy is excited for the opportunity to bring our laser focus on sustainability and asset optimization to this expanded leasehold, and we look forward to a continued partnership with the local community.
“We plan to continue our effort to produce and certify responsibly sourced gas in the Pinedale Anticline and Jonah fields, and are committed to be best-in-class with a focus on delivering on our promises to all our stakeholders.”
Terms of the deal were not released.
The amount of workers affected, and if any jobs will be lost as a result of the acquisition, were not confirmed to the Roundup.
Sublette County Board of Commissioners Chairman Joel Bousman said it's his understanding that about 20 PEP employees – or nearly half of its workforce – were let go as a result of the deal. Bousman told the Roundup that the commissioners were made aware of discussions regarding PEP's sale previously.
UP Energy did not return the Roundup’s requests for further comment. A representative for Pinedale Energy Partners told the Roundup that the company could not comment about four hours before UP Energy confirmed the acquisition and did not return a request for comment after UP Energy’s confirmation.
The loss of jobs could have lasting impact in the county. Workers who lost their jobs may leave the county entirely in search for new employment. That could immediately decrease enrollment in schools, which could receive diminished funding as a result of a smaller population. It also harms a community in a neighborly sense.
“You feel for them,” Bousman said. “When they’re here they’re part of the community. Their kids go to our schools, our kids are friends with their kids. It can be a destructive thing.”
Ultra Petroleum recently emerged from its second Chapter 11 bankruptcy since 2016 last September with $60 million in funding and $100 million in available credit. The company also converted to UP Energy LLC, a private company.
Both Bousman and county treasurer Emily Paravicini said the sale shouldn't impact Sublette County's tax revenue much. The county takes tax revenue based upon production and, as Bousman said, this sale shouldn't alter revenue unless it affects active rigs.
“Ultra has been very good for the county,” he said. “We have a good working relationship. When they went through bankruptcy they said they'd make sure their taxes were paid and they were.
“We haven't been left out to dry by PEP or Ultra.”
Paravicini said the county anticipates a drop in tax revenue in the next year. Having the mineral companies pay their Ad Valorem taxes “is paramount” to the county being able to fund social services and its infrastructure like schools, health-care facilities and libraries.
“I don’t think that there will be any issues for the County with the Ultra purchase of PEP. Ultra has a good history with Sublette County, and having a purchaser that has deep roots here, means that perhaps they’ll stay and keep Sublette County residents working,” she said. “It’s been a tough go for Oil and Gas producers for the last year or so, fingers crossed that things at the very least do not get worse.”
Both Paravicini and Bousman stressed hardships the Biden administration's leasing moratorium has caused on the oil and natural gas industries in Sublette County specifically. Approximately 90 percent of the county's revenue comes from the natural gas sector and Bousman said the latest approach from the Biden administration is scary.
Paravicini said she hoped Gov. Mark Gordon would continue to keep responsible mineral producers and residents working. She also said the current administration's approach to green energy in terms of gas production is counter intuitive.
“Many of the green options for energy production are petroleum product dependent,” she said, “so my opinion is that shutting off all petroleum production is counter productive to what they’d like to achieve.”
UP Energy LLC controls more than 83,000 net acres in and around Pinedale and Jonah fields.
Pinedale Energy Partners closed a $740-million deal in September 2017 that purchased all assets in the Pinedale Field previously held by QEP Energy Company. PEP operated as a subsidiary of Oak Ridge Natural Resources, based in Tulsa, Okla.
According to the latest annual updates and planning forecasts for 2021 to the Bureau of Land Management released earlier this week, Ultra plans to use 1.3 drilling rigs to develop 27 wells in Development Area 3 and 16 wells in DA 5. Two new pads will be built with no plans at this time to build additional wells in 2022.
In that same forecast, Pinedale Energy Partners completed four wells in the first quarter with plans of one pad expanding in the third quarter, “if business metrics are met.” Pinedale Energy Partners stated its 10-year forecast anticipated 64 more wells drilled and about one pad a year through the rest of the decade.
Ultra and PEP jointly submitted an air-quality update earlier this month.
This is a developing story and will be updated. Last updated 10:44 a.m. Monday, May 3.