Final approval issued for Oil Search;
Climate change writer in Nuiqsut?
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Kay Cashman Petroleum News
Oil Search, Alaska’s newest oil and gas player, has received its final regulatory approval connected with the company’s acquisition of an interest in Armstrong Energy’s Pikka and Horseshoe leases on the western North Slope. The approval, effective March 15, came from Alaska Department of Natural Resources’ Division of Oil & Gas Director Chantal Walsh.
Oil Search bought Armstrong and its minority partner’s interests at the Pikka and Horseshoe prospects in late October.
At the time of acquisition, Oil Search said the deal was made on the basis of some 500 million barrels of recoverable oil, noting Armstrong estimates were more than 1 billion barrels.
The ASX-listed publicly traded company with offices in Sydney, Australia and Port Moresby, Papua New Guinea, told analysts Nov. 1 that it paid $400 million for a 25.5 percent interest in the Pikka unit and adjacent exploration acreage and 37.5 percent interest in the Horseshoe block and the Hue shale.
Oil Search has the option, exercisable until June 30, 2019, to purchase all of Armstrong and its partner’s remaining interest in the Pikka unit and the Horseshoe block (another 25.5 percent and 37.5 percent respectively) as well as an additional 25.5 percent interest in adjacent exploration acreage and 37.5 percent in the Hue shale.
In her decision Walsh said the division’s approval was contingent on approval by Arctic Slope Regional Corp. Teresa Imm at ASRC was copied on the division’s decision.
In a March 21 phone call with Imm, she told PN, “Yes, we’re going to approve it, effective March 15.”
In a Nov. 1 presentation to analysts Oil Search officials said the company planned takeover operatorship from Armstrong in June, a process dependent on the closure of the purchase and related regulatory approvals, but in January, company executive Keiran Wulff, who heads up Oil Search in Alaska and has relocated to Anchorage, said it would likely be sooner.
Oil Search, which operates oil fields in Papua New Guinea, and is a partner in the PNG LNG project with Exxon and Repsol, said the Alaska purchase would be funded from its existing cash position; that there would be no requirement to raise equity.
The company has the option, exercisable until June 30, 2019, to purchase all of Armstrong and its partner’s remaining interest in the Pikka unit and the Horseshoe block (another 25.5 percent and 37.5 percent respectively) as well as an additional 25.5 percent interest in adjacent exploration acreage and 37.5 percent in the Hue shale.
Repsol continues to hold as much as a 49 percent interest in Pikka and Horseshoe acreage, depending on the lease.
Armstrong/Oil Search partnership still strong As reported previously in PN, Bill Armstrong and his company will continue to work in Alaska as Oil Search’s partner. The Denver-based independent has turned its offices in Peterson Towers in downtown Anchorage over to Oil Search.
In its initial release of information about the acquisition Oil Search said it “will form a long-term partnership with Armstrong, leveraging its technical capabilities and experience in the identification of additional potential growth opportunities in Alaska,” a relationship later confirmed in a meeting between PN, Wulff and Bill Armstrong, founder and president of the Armstrong group of companies.
Oil Search has deeper pockets than Armstrong to fund major exploration and development projects, but the flexibility to move quickly and decisively on opportunities - in other words, an excellent match for Armstrong.
Has anything changed since PN reported on the Oil Search/Armstrong alliance?
No, nothing has changed, Bill Armstrong told PN in a March 20 email.
“Alaska is one of the last best places for opportunities in an otherwise playing field with very little grass on it. Not to say by, any means, that it is easy,” he added.
Armstrong’s success with revolutionizing exploration in northern Alaska has opened up more possibilities in previously unexplored or barely explored parts of Arctic Alaska, essentially launching a rethink of the potential for finding oil and gas in the Brookian sequence, the youngest of the major petroleum bearing rock sequences (see article about Dave Houseknecht and U.S. Geological Survey on page 1 of the Nov. 17 issue of Petroleum News).
Climate change advocate visits Nuiqsut According to a PN source close to Nuiqsut, Sabrina Shankman, author of the book “Meltdown: Terror at the Top of the World” and a reporter for InsideClimate News, recently visited the village (unconfirmed by Shankman or InsideClimate News).
Meltdown tells the story of seven American hikers who went on a wilderness adventure in Canada's Arctic - “polar bear country” - and came back with a “tale of terror,” per the book’s sales description on Amazon, which also said: “Based on interviews with all seven hikers as well as many of the world's experts on polar bears and sea ice, Meltdown tells the story of the hikers’ harrowing encounter with a polar bear; the plight of the polar bear in general, facing starvation and extinction as the sea ice melts and its habitat disappears; and of the Arctic meltdown, an advanced symptom of man-made climate change that is touching everyone, everywhere.”
One reviewer said the book was a “call for dramatic action on climate change.”
On its website, InsideClimate News says it is “committed to establishing a permanent national reporting network, to training the next generation of journalists, and to strengthening the practice of environmental journalism.”
Blodgett’s work draws attention Alaska geologist Robert Blodgett is making headlines this year.
A PowerPoint talk he gave at the American Association of Petroleum Geologists in 2011 on the early history of oil exploration in southern Alaska has made the current issue of the Alaska Geological Society’s newsletter (pages 6-15).
Plus, part of an article on the North Slope Stinson well that Blodgett and Steve Sutherlin, chief executive of Strategic Action Associates in Anchorage, wrote some time ago showed up in the latest edition of AAPG’s esteemed Explorers magazine, titled “Stinson well could be key to Alaska’s ANWR.”
“This is an excellent trend along the Northwest margin of ANWR, Blodgett told Petroleum News in an email.
Editor’s note: Steve Sutherlin is a minority member of Petroleum Newspapers of Alaska LLC, owner of Petroleum News.
Joey Hall heads up Permian ops for Pioneer For those of you who remember Joey Hall, Pioneer Natural Resources former operations manager in Alaska, Hall is currently executive vice president, Permian operations, for Pioneer and a member of the company’s management team. He is responsible for planning, development and operations activities in the Permian basin, where the company has the largest Spraberry/Wolfcamp acreage position with decades of drilling inventory.
In Alaska, Hall was responsible for all drilling, production and construction activities. Under his leadership, Pioneer, which was the first company Armstrong Energy brought to the state as a partner, completed the Oooguruk development, establishing Pioneer as the first independent oil and gas company to produce on the North Slope of Alaska.
When Pioneer left the state, it turned its focus to developing its Eagle Ford assets and Hall was tasked with leading that capital-intensive development, beginning as vice president, Eagle Ford asset team, then as senior vice president of South Texas operations.
Hall’s attention shifted to the Permian basin when he became executive vice president, Southern Wolfcamp operations.
In 2015, he assumed leadership over all of Pioneer’s Permian operations.
So, his position with Pioneer today might be old information to his close friends, but it was news to PN.
- KAY CASHMAN
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