NEWS BULLETIN
October 27, 2010 --- Vol. 16, No. 96October 2010

New player takes big North Slope position

Newcomer Great Bear Petroleum LLC made a big showing at today’s Alaska North Slope areawide lease sale: taking 105 tracts, more than half a million acres and some $8 million in apparent high bids.

The total for the sale was 129 tracts sold, 602,880 acres, and $8,811,226.40 in apparent high bids.

Ed Duncan, Great Bear’s president and COO, said after the sale that he didn’t target 100 percent success — the company took every tract on which it bid — and said they’ll have to cull some tracts to get below the state’s 500,000-acre limit.

The tracts Great Bear took are primarily a large block south of Kuparuk and Prudhoe.

Division of Oil and Gas Director Kevin Banks said after the sale that the Great Bear sweep was somewhat analogous to last year’s North Slope sale, when Denver-based Armstrong took 68 tracts (it bid on 69) of 80 at the sale, for $7.6 million in apparent high bids.

Duncan said he and Bob Rosenthal, the company’s vice president of new ventures, have both worked in Alaska in the past and have a good understanding of petroleum systems on the North Slope.

There are five principles in Great Bear Petroleum, he said, and while only he and Rosenthal have worked in Alaska, all the principles are long-time colleagues.

Duncan said Great Bear believes “there are expansive new plays” in the area of its leases.

The Texas-based company plans to open an Anchorage office and Duncan said he and Karen Bryant Duncan, the firm’s vice president-corporate and general counsel, will be relocating to Anchorage in the spring.

ConocoPhillips earnings down quarterly, up annually

ConocoPhillips earned $361 million in Alaska in the third quarter of the year.

That’s a slight increase over the $356 million ConocoPhillips earned in the third quarter of 2009, but down from the $381 ConocoPhillips million earned in the second quarter.

While earnings have zigzagged over the past two years, production keeps falling.

ConocoPhillips produced 215,000 barrels of oil and natural gas liquids in Alaska in the third quarter of 2010, down both year-over-year and quarter-over-quarter. The company produced 221,000 bpd in the second quarter and 229,000 in the third quarter of 2009.

However, ConocoPhillips continues to produce more liquids in Alaska than in the Lower 48, where the company produced 160,000 bpd in the third quarter of the year.

Oil prices remain relatively level following the huge swings of 2008. ConocoPhillips reported an average sales price of $75.87 per barrel of Alaska North Slope crude in the third quarter, down $1.57 quarter over quarter, but up $7.96 year over year.

ConocoPhillips produced 82 million cubic feet of natural gas in Alaska in the third quarter, even from the second quarter but down from 105 mmcfpd year-over-year.

Alaska natural gas prices fell to $4.59 per thousand cubic feet in the third quarter, down from $4.73 per mcf in the second quarter and $4.87 per mcf in the third quarter of 2009.

Liquefied natural gas sales are down considerably year over year.

ConocoPhillips sold 49 mmcfpd of LNG in the third quarter of 2010, down from 51 mmcfpd in the second quarter of the year and 82 mmcfpd in the third quarter of last year.

But LNG prices are on the rise.

ConocoPhillips reported an average sales price of $12.84 per mcf in the third quarter, up from $12.08 per mcf in the second quarter and $8.29 per mcf in the third quarter of 2009.

ConocoPhillips and partner Marathon Oil recently got federal approval to continue LNG exports to Asian markets for at least another two years, until March 31, 2013.

See stories in the Oct. 31 issue of Petroleum News, available to subscribers online at noon, Friday, Oct. 29 at www.PetroleumNews.com

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