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NEWS BULLETIN

August 07, 2001 --- Vol. 7, No. 95August 2001

State approves Sakonowyak River unit near Northstar

The state Division of Oil and Gas has approved an application from Alaska Venture Capital Group LLC on behalf of unit operator BP Exploration (Alaska) Inc. to form the Sakonowyak River unit. The new 11,520 acre unit is located at the mouth of the Sakonowyak River. It abuts the western border of the Northstar unit and is three miles north of the Prudhoe Bay unit boundary.

AVCG is a Kansas-based independent.

Upon approval of pending assignments from ExxonMobil and Philips Petroleum Co., BP and AVCG will have 62 percent and 38 percent working interests in the unit, respectively.

The unit’s five leases encompass all or part of a potentially oil bearing reservoir in the Kuparuk River formation.

The working interest owners proposed a three year exploration plan that calls for drilling two wells. The Sak River #1, in Block A on the eastern side of the unit, is to be drilled on or before May 1, 2003. The Sak River #2, in Block B, will be drilled and completed by May 1, 2004 (Block B). The second well could be a side track from the Sak River #1 in Block A or Block B if its bottom hole is a minimum of 1,500 feet from the bottom hole of the first well — and is in a different fault block.

The wells will be drilled either directionally from a land location or from on offshore ice pad in Gwydyr Bay. They would be drilled to depths sufficient to penetrate the Kuparuk formation or 8,600 feet TVD.

The Northstar unit is scheduled to commence production in October from the Ivishak formation. Production from the Kuparuk River formation began in 1988 at the Point McIntyre field approximately six miles east of the Sakonowyak unit.

Shut in Kuparuk River production has been established at the Gwydyr Bay field – a two-well accumulation about three miles southeast of the Sakonowyak unit.

Two wells have been drilled in the Sakonowyak unit: one was completed in 1974 and demonstrated untested shows of oil in the Kuparuk River formation. The other, drilled in 1984, proved unproductive.

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