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November 23, 2010 --- Vol. 16, No. 108November 2010

Escopeta has cash, jack-up, state extension for CI drilling

Escopeta Oil says it has the funds and contracts in place to ship a jack-up rig to Southcentral Alaska in February, in preparation for drilling in upper Cook Inlet in April. The Houston independent has also resolved legal issues with the State of Alaska that are crucial to its drilling plans.

Escopeta plans to use the Spartan 151 jack-up rig currently stationed in the Gulf of Mexico, which it will bring to Alaska on a heavy lift vessel owned by Dockwise, an international firm based in The Netherlands.

“We’re doing it. It’s going,” Escopeta President Danny Davis told Petroleum News on Nov. 23.

“The Spartan rig is currently drilling a well in the Gulf of Mexico. … From there we are moving it to Freeport where Dockwise will load it for Alaska in mid-February. … Our intention is to make the jack-up a Cook Inlet asset, for use by ourselves and others. … We’re using almost all Alaska labor. We’re using the Arness Dock two miles west of Kenai, and we’re opening an office at the dock and possibly in Anchorage,” Davis said

If successful, Escopeta would become the first company to bring a jack-up rig to Alaska in nearly two decades, allowing for drilling of several underexplored offshore Cook Inlet prospects, including its prospects in the Kitchen Lights unit.

The state placed the Kitchen Lights unit in default in July, a ruling Escopeta appealed in September.

Since Escopeta filed its appeal, the deadline to cure the default passed, and so Escopeta recently asked the Alaska Superior Court for a stay until the matter is resolved.

With its drilling program now funded and contracted, the company asked the state to lift the default and increase by one month the timeline for drilling deadlines approved in July.

According to Kevin Banks, director of the state’s Division of Oil and Gas, the default has been lifted and the new deadlines approved.

Banks told PN Nov. 23, the state “has a signed agreement with Escopeta that basically says we withdraw our default and Escopeta withdraws its litigation.”

The default was withdrawn “as of today.”

The state took the action based on “several representations by Escopeta,” including Escopeta “having a contract with Spartan Offshore Drilling, Escopeta preparing to enter into a heavy life vessel contract, and having $15 million on deposit in a U.S. bank account.”

Per the agreement, Escopeta “has to have a drilling rig mobilized, under way, by March 30, 2011 … and has until Oct. 31, 2011, to drill its first well,” Banks said.

Note: See full story in the Nov. 28 issue of Petroleum News, which will be available online Friday at 11 a.m. Alaska time.

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