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Providing coverage of Alaska and northern Canada's oil and gas industry
May 2017

Vol. 22, No. 21 Week of May 21, 2017

Repsol adds more interest at Pikka

Acquires 25-49 percent interest in 122 Armstrong leases; Alliance adds acreage at Hemi Springs; Anadarko drops Foothills leases

Eric Lidji

For Petroleum News

Armstrong Energy LLC has transferred sizable working and royalty interests in a large package of North Slope leases to its longtime exploration partner Repsol E&P USA Inc.

In a series of decisions dated April 5, the state Division of Oil and Gas approved the assignment of working and royalty interest for approximately 122 leases in the North Slope and Beaufort Sea regions. Among the acreage under consideration were 22 leases at the Pikka unit, where the two companies have made big discoveries in recent years.

Through the series of transactions, Armstrong transferred 25 percent working interest and either 20.83333 or 21.875 percent royalty interest in 79 leases, and also transferred 49 percent working interest and either 40.83333 or 42.875 percent royalty interest in 43 leases to Repsol. The assignments were approved retroactive to the start of the year.

The assignments appear to cover leases where Armstrong held 100 percent working interest, which means that the company will retain a majority stake in those leases.

Not included in the package of leases were ADL 392048 or ADL 392049, where Armstrong drilled the Horseshoe No. 1 well and No. 1A sidetrack earlier this year.

Under the original terms of their partnership, Armstrong held a 45 percent interest in exploration acreage and a 30 percent interest in the development acreage. Following a restructuring in late 2015, Armstrong assumed a 75 percent interest and operatorship in the exploration acreage and a 45 percent interest in the development acreage with an option to acquire another 6 percent and operatorship - an option the company took.

Hemi Springs

Also in April, the state approved a series of deals between Daniel K. Donkel, Samuel H. Cade and Alliance Exploration LLC involving a package of North Slope leases.

Through the deals, Donkel transferred 100 percent working interest and 81.83333 percent royalty interest in 12 leases to Alliance Exploration. Those leases are ADL 391750, ADL 391757, ADL 391758, ADL 391759, ADL 391766, ADL 391767, ADL 391768, ADL 391774, ADL 391775, ADL 391776, ADL 391777 and ADL 391778. In turn, Alliance Exploration transferred a 1.5 percent royalty interest in the leases back to Donkel.

Donkel also transferred 25 percent working interest and 20.45833 percent royalty interest in four other leases to Alliance Exploration. Those leases are ADL 391544, ADL 391545, ADL 392104 and ADL 392109. Cade transferred to remaining 25 percent working interest and 61.375 percent royalty interest in those same four leases to Alliance Exploration. In turn, Alliance Exploration transferred 0.375 percent royalty interest in the leases back to Donkel and 1.125 percent royalty interest in the leases back to Cade.

The leases are part of the Hemi Springs prospect, immediately south of the Prudhoe Bay Unit. Pioneer Natural Resources drilled the Hailstorm No. 1 well on ADL 391757.

Alliance already holds at least five leases adjacent to the newly acquired block.

Alliance Exploration LLC was officially formed in November 2016, according to Alaska corporations’ records. The company is a wholly owned subsidiary of the Linger Trust.

Anadarko

Anadarko Petroleum Corp. surrendered eight leases in the foothills of the Brooks Range Mountains. The leases - ADL 392375, ADL 392376, ADL 392377, ADL 392378, ADL 392379, ADL 392380, ADL 392381 and ADL 392382 - were located in a bundle along the Kuparuk River unit, near the E. Kuparuk Unit No. 1 and Kuparuk Unit No. 1 wells.

For a time starting in 1998, Anadarko was the largest leaseholder in Alaska, with some 3.3 million acres in its portfolio. But the company has been relinquishing leases throughout the region for several years, following a pioneering gas exploration program.

Other news

• The state is currently considering 15 separate transactions involving four working interest owners in five leases at the offshore Kitchen Lights unit. Lee Higgins & Terrie L. Stull-Higgins and Paul W & Lori A. Lokke have asked to transfer a 0.25 percent royalty interest in five leases to Proak LLC, and Proak Royalties L has asked to transfer a 2.656248 percent royalty interest in the leases to Northern Lights Royalties LP. The leases are ADL 389927, ADL 389928, ADL 389929, ADL 390374 and ADL 390381.

• A lease in the Foothills region held by Dan Donkel - ADL 391035 - expired.

• Hilcorp Alaska LLC surrendered lease ADL 392240. The offshore Cook Inlet lease was adjacent to the North Trading Bay unit and was set to expire at the end of May 2023.

- A copyrighted oil and gas lease map from Mapmakers Alaska was a research tool used in preparing this story.






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