NEWS BULLETIN

March 01, 2006 --- Vol. 12, No. 14March 2006

Beaufort Sea, North Slope sales net state $31.2 million

The state of Alaska had two dynamite lease sales today, with a Beaufort Sea areawide sale bringing in $14.96 million and a North Slope areawide sale bringing in $16.29 million, for a total of $31.25 million on the day.

The sale also saw Chevron, bidding as Union Oil Company of California, top the bidding list, taking 48 tracts in the North Slope sale south of Kuparuk where the company has a dozen existing leases for $6.95 million, followed by ENI Petroleum Exploration at $5.62 million. ENI took 11 tracts southeast of Kuparuk and Prudhoe in an area where the company already has acreage. ConocoPhillips Alaska was just shy of the million-dollar mark in the North Slope sale with nine tracts, including six at the southwest corner of Kuparuk.

The largest bidders in the Beaufort Sea sale included ConocoPhillips Alaska with total bids of $5.42 million including a block of seven tracts in the Cross Island area, adjacent to a large block of OCS leases the company already holds and BP Exploration Alaska which took two tracts for $5.2 million, paying $5 million-plus for a single tract adjacent to its Liberty prospect. At $1,093.33 per acre, this $5,051,724.80 tract has the highest per-acre and the highest total bonus bid in either sale.

FEX LP took 25 tracts in Smith Bay for a total or $1.46 million and Patterson Shaw out of Denver took seven tracts adjacent to Liberty for $1.465 million.

Chevron to keep Cook Inlet assets

Chevron Corp. will keep the Unocal Alaska Cook Inlet assets it acquired in the $18 billion 2005 takeover of Unocal Corp., according to John Zager, Chevron’s Alaska general manager.

In testimony to a legislative committee meeting today in Juneau, Zager said people thought Chevron would not keep its Unocal Cook Inlet assets, but his team worked hard to convince Chevron’s board of directors the assets were worth keeping. He said he informed the company’s Alaska employees of the decision in February.

Zager said the company will enter into a multi-year investment plan in Cook Inlet. “With our partners we’ll be investing $200 million over four years in just the oil part of our Cook Inlet business,” he said.

Zager said Chevron will retain all current employees and its Anchorage offices. The company’s Alaska work force is expected to grow over the next few months, he said

Zager said the company plans to undertake 35-50 investment opportunities in Alaska that “run the gamut from new well bores to deeper pool tests,” to enhanced oil recovery projects.

“No rank exploration wells,” Zager said. “All the wells will be drilled off existing platforms in Cook Inlet.”

Chevron has decided to fully integrate its Unocal and Chevron Alaska assets, Chevron spokeswoman Roxanne Sinz told Petroleum News today.

A strategic evaluation of Alaska properties identified potential long-term value which can be delivered by the full integration of all Unocal and Chevron production properties and development opportunities in Cook Inlet and on the North Slope, she said.

Chevron-Unocal had “pre-cash flow” profits from Alaska operations of $300 million in 2005, Zager said. “We hope to be here and operating for a long time.”

Note: The full stories for both the above news items will appear in the March 5 edition of Petroleum News, which will be available online on Friday, March 3, at www.petroleumnews.com


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