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Escopeta seeks more jack-up partners Initial public offering on London Stock Exchange fails to raise sufficient funds to bring rig to Cook Inlet for drilling program; have $15 million but need more to drill Kitchen prospects Alan Bailey Petroleum News
Escopeta Oil is seeking additional partners to bring a jack-up exploration rig to Cook Inlet, after Centurion Gold Holdings Inc. withdrew its initial public offering of shares to fund the use of the rig. According to a Business Wire report, the share offering on the U.K. AIM market, a London Stock Exchange market that deals internationally in small growth companies, created “a lot of private interest” but only raised $15 million, well short of the required funding.
In 2005, Houston-based Escopeta formed a partnership with Johannesburg-based Centurion for the jack-up rig proposal — Centurion was going to raise the necessary capital through the sale of shares of a new company called Arrik Energy Inc., established specifically for the Cook Inlet venture. Centurion would then acquire a majority ownership of the 130,000 acres that Escopeta has under lease in the Cook Inlet, with Escopeta remaining the operator of the leases. The leases include the two Kitchen prospects, which lie in the deep central part of the Cook Inlet basin and which Escopeta believes contain major oil and gas resources.
“We think we have a possible total resource of 1.2 billion barrels of oil and 7 trillion cubic feet of gas,” Escopeta President Danny Davis has said of the prospects.
But those prospects lie offshore — hence the need to bring a jack-up rig to Cook Inlet.
The Tellus rig In March 2006, Escopeta entered into a contract with Songa Drilling for the use of the Tellus jack-up rig, with Kenai-based Inlet Drilling providing the drilling crew. An independent-leg cantilever jack-up, the Tellus could work comfortably in 250 feet of water and had a drilling depth capacity of 20,000 feet — more than enough for what the company needed, Davis said.
Escopeta also contracted with Coscol (HK) Investment & Development Co. of Hong Kong to use the heavy lift vessel Tai an kou to carry the Tellus from the Gulf of Mexico to Cook Inlet.
At the same time, Centurion kicked off the AIM initial public offering through a London investment bank.
But the Tellus rig required refurbishment before being moved to Alaska. That refurbishment, which took place at Port Arthur, Texas, proved to take much longer than initially anticipated and, as a consequence, an initial plan to move the rig in June had to be rescheduled to December.
Jones Act waiver In July, the U.S. Department of Homeland Security granted a waiver of the Jones Act to enable the foreign-flagged Tai an kou to carry the Tellus to Alaska . The Jones Act mandates the use of an American-flagged vessel for this task.
In the fall, Centurion launched a retooled AIM initial public offering based on a plan to begin its exploration program with a well at Escopeta’s North Alexander prospect, onshore on the northwestern edge of the Cook Inlet basin along the western margin of the Susitna River drainage.
Offshore drilling was rescheduled for spring 2007on the assumption that the jack-up rig would leave Port Arthur for the Cook Inlet in December.
At about the same time the Jones Act waiver was being issued Abbot Holdings Norge AS acquired Songa, the owner of the Tellus rig. That takeover triggered a flurry of rumors of problems with the relationship between Escopeta and Songa.
During that time period Abbot landed a jack-up rig contract in Mexico with day rates significantly higher than the rate agreed with Escopeta for Cook Inlet drilling.
But in mid-October Davis told Petroleum News that Escopeta’s plans were moving forward.
“The Songa Tellus will come to Cook Inlet in early 2007, as soon as weather allows — if the Tellus is finally ready and if Escopeta and Songa Drilling can iron out contract issues that arose because of refurbishment delays,” Davis said.
“Escopeta wants Songa to honor its contract, but if the Tellus isn’t available, Escopeta will contract a different jack-up rig to meet its 2007 drilling objectives,” he said.
Escopeta perseveres So what does Centurion’s withdrawal of the AIM initial public offering mean for Escopeta’s offshore plans?
Escopeta will continue to honor commitments to Centurion but will also entertain proposals from additional partners, said Davis in a Dec. 1 statement that confirmed that the company is actively seeking those partners.
He said his company will drill in 2007, starting with its East Kitchen prospect offshore near the Kenai Peninsula town of Nikiski. Davis also said that Escopeta is sensitive to the fact that people need new sources of Cook Inlet natural gas for heating, electric generation, military and industrial use.
“They need that gas and we’re going to go get it for them. Escopeta has made a commitment — to the president, to the director of Homeland Security, and to the Department of Energy — to move a jack-up drilling rig to Cook Inlet and drill for gas and oil. … Escopeta sits on two of the largest drilling prospects in the United States, reserve-wise. In my opinion, Escopeta is sitting on the future of Cook Inlet gas supplies,” Davis said.
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