HOME PAGE All ADVERTISING OPTIONS SUBSCRIPTIONS - Print Edition, News Bulletin Service PRODUCTS - Special Publications SEARCHABLE ARCHIVES Free Trial Subscription Email this News Bulletin to an associate.
NEWS BULLETIN

June 15, 2011 --- Vol. 17, No. 52June 2011

Linc takes control of Umiat oil field, looking to expand in Alaska

A few minutes ago Australia’s Linc Energy Ltd. said its wholly owned subsidiary, Linc Energy (Alaska) Inc., has acquired a controlling interest in the Umiat oil field by buying Renaissance Alaska LLC, which holds an 84.5 percent interest in Renaissance Umiat LLC.

Renaissance Umiat has a 100 percent working interest in the oil field and an “80 percent net revenue interest in the project,” which is in the National Petroleum Reserve-Alaska, 140 miles southwest of Prudhoe Bay and about 80 miles west of the trans-Alaska oil pipeline in the Brooks Range Foothills.

The project consists of 19,358 gross acres on three leases, one is a state lease and two are federal leases.

The purchase price, Linc said in a press release, was US$50 million “plus adjustments for working capital, deposits and inventory.” It will be funded from the company’s cash reserves and is expected to close July 6.

According to Linc, “the 80 percent net revenue interest in the acquired leases is currently attributed Net Probable & Possible Reserves (3P) of 201 million barrels of oil equivalent (201 MMBOE), with the current estimated Original Oil in Place (OOIP) within the acquired Umiat lease area of one billion barrels (1,000 MMBO).”

Following the acquisition, “additional exploration and completion of feasibility and engineering studies, it is anticipated that the majority of the capital expenditure for construction of the oil field and pipeline infrastructure will be debt funded,” Linc said.

A “significant factor” in the company’s acquisition was the State of Alaska’s “public commitment” to build a 92-mile all-season gravel road to Umiat from the Dalton Highway, which runs adjacent to the trans-Alaska oil pipeline.

Subject to permitting, Linc “aims to fly a drill rig into the Umiat 5,583-foot airstrip as soon as practically possible to commence further drilling of the area.”

In addition, the company “plans to commence shooting additional 2D and 3D wireless seismic upon the Umiat leases as soon as practicable and before this Alaskan Winter.”

Linc anticipates working closely with the State of Alaska to “permit and develop the pipeline infrastructure between the Umiat oil field and TAPS in parallel with the Umiat road development, with the pipeline to be trenched into the road.”

The completion of the pipeline “will mark the first significant all-season oil transport infrastructure into the southern part of the NPR-A, opening up the area for further significant development,” Linc said.

“Previous independent studies by NANA WorleyParsons LLC commissioned by Renaissance Umiat LLC, confirmed the viability of a cold pipeline buried in the road, with a preliminary construction estimate of US$207m (including a 25% contingency) and a construction period of one season (4-5 months),” Linc said in its press release.

It will complete “further detailed feasibility and engineering studies on the pipeline development before finally committing to the pipeline project.”

Peter Bond, Linc’s chief executive officer, said, “Linc Energy’s decision to invest in Alaska and pursue a significant conventional oil and gas exploration and development program was greatly assisted by the availability of a number of generous State of Alaska incentives.”

Bond said he was “very proud of the team” Linc is building in Alaska and “very excited about our current land position and the many opportunities we can see for expanding our operations in the state,” noting that Linc is “extremely well positioned, with access to the necessary capital and resources, to take this project into production on an aggressive timetable.”

Umiat is the “book-end” oil project the company is planning to develop and bring on-line over the next four years.

“I believe that this project has great potential and should contribute significantly towards Linc Energy reaching its 100,000 barrel per day production goal over the coming years,” Bond said.

The Umiat acquisition “marks another significant step in our USA business strategy and evidences our long-term commitment to our Alaskan operations as one of the centrepieces of the Company. Using Umiat as a northern base of operations, we intend to increase our oil, natural gas and coal exploration and development activities across the North Slope Foothills. I sincerely believe that the potential in this area for all of Linc Energy’s Oil & Gas, Coal & Clean Coal and Clean Fuel operations is simply staggering and virtually impossible to replicate in any other part of the world,” Bond said.

Linc will be “significantly expanding” its Alaska-based workforce over the coming months, he said.

Already a leaseholder and operator in the Cook Inlet basin, Linc did not find a commercial deposit of natural gas with its first well in Alaska, but the Australian independent said in its May 2 announcement about those well results that it remained bullish about its opportunities in the state.

See story in June 19 issue, available online at 11 a.m., Friday, June 17 at www.PetroleumNews.com

Print this story
Did you find this article interesting? Email it to an associate.
Petroleum News - Phone: 1-907 522-9469 - Fax: 1-907 522-9583
[email protected] --- http://www.PetroleumNews.com
S U B S C R I B E

CLICK BELOW FOR A MESSAGE FROM OUR ADVERTISERS.