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GMT excited about Alaska opportunities Denver independent brought north by Armstrong, partnering at North Fork and White Hills, prepping approach for offshore acreage Eric Lidji For Petroleum News
A decade ago, Armstrong Oil and Gas changed the Alaska oil industry by drilling wells quickly and then bringing on larger oil companies as partners to operate exploration and development programs with Armstrong’s assistance. Now, Armstrong could be starting a second wave with a fellow Denver-based independent called GMT Exploration Co. LLC.
Although GMT doesn’t have concrete drilling plans yet for Alaska, the company has been busy since arriving in the state early this year, appearing at several major lease sales and partnering with Armstrong on two ventures, one about to go into production. This year, GMT has amassed a sizable land position spread across three areas of Alaska: the southern Kenai Peninsula in the Cook Inlet basin, the central North Slope south of the Kuparuk River unit and offshore in state waters off the coast of the North Slope.
“Had it not been for (Armstrong) we would not be here today, it’s safe to say,” Philip Wood, with GMT Exploration, told Petroleum News on Oct. 29.
GMT Exploration began an offshoot of GMT Capital Corp., an Atlanta-based private investment firm founded in the 1990s. GMT Exploration is now based out of Denver, a while it has common shareholders with GMT Capital, it’s run independently, Wood said.
Midcontinent operator GMT Exploration operates in Wyoming, East Texas and other midcontinent areas. The company first took notice of Alaska in 2005, going as far as incorporating in the state.
That was at the tail end of Armstrong’s first stretch of activity in Alaska, right around the time the company sold the last of its oil and gas assets in the state in August 2005.
That first run brought a unique strategy to the North Slope, a region long dominated by major oil companies with pockets deep enough to conduct expensive exploration campaigns and enough manpower to staff development operations as mammoth oil fields.
In less than three years, Armstrong brought three new companies to Alaska, the large independents Pioneer Natural Resources and Kerr-McGee, and the Italian major Eni Petroleum. Armstrong helped prove up the Oooguruk prospect that Pioneer brought online in 2008 and the Nikaitchuq and Tuvaaq prospects that Kerr-McGee pursued initially and Eni combined and now hopes to bring online within the next few months.
Armstrong stayed quiet for a while after selling its assets, but returned in late 2007 by taking over the North Fork unit, a long dormant field in the southern Kenai Peninsula.
Armstrong eventually brought GMT Exploration and several other independents on as partners. GMT now holds between 20 and 30 percent interest in the leases at North Fork.
That partnership should pay off fairly soon, when the natural gas field comes online.
Also looking to operate North Fork will give GMT its first production in Alaska, but it won’t be the end of its partnership with Armstrong. GMT recently acquired a 25 percent interest in Armstrong holdings on the central North Slope, an area recently vacated by the Chevron affiliate Union Oil Co. of California. Known as White Hills, the area is believed to have both natural gas and oil shows. Unocal drilled at least five wells there in 2008 and 2009.
As a minority partner, GMT isn’t in a position to discuss the future of White Hills, but Wood said, “We have a lot of hopes and dreams for it and we’re floating a million ideas.”
North Fork and White Hills are atypical projects for GMT. Wood said the company typically owns 50 to 100 percent of its fields and operates the majority of its fields.
The two Alaska plays also do not represent GMT’s full ambitions for Alaska. The company is gas-focused in the Lower 48 and sees Alaska as a chance to expand into oil.
Beaufort Sea acreage This year, GMT pursued that goal by acquiring state acreage at the two Beaufort Sea lease sales this year. The acreage is mostly in Harrison Bay, northwest of the Colville River unit, but includes two leases adjacent to Pioneer’s Oooguruk unit farther to the east.
“Winning at this week’s sale really helped us put that plot together and now we’re deciding how to go forward,” Wood said, noting the challenges of Arctic exploration.
Before the October lease sale, GMT held nearly 86,000 acres in state leases.
GMT appears to have a similar strategy to Armstrong when it comes to developing its property. Armstrong has said it prefers to use existing revenue to fund new drilling projects. Wood said, “For one thing, we don’t use outside capital that forces us to do anything on a timeline.” GMT also seems to share Armstrong’s enthusiasm for moving forward on new projects. He also said, “We’re not afraid to drill,” but noted that a small company drilling on the North Slope can eat up capital quickly, and may need partners.
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