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Newcomer Iona has eye on Alaska Canadian-Scottish company got one high bid in Chukchi Sea lease, plans to pick up additional offshore acreage around the world Eric Lidji Petroleum News
At the historic lease sale on Feb. 6 for drilling rights to the Chukchi Sea, one company managed to raise eyebrows not for spending big bucks, but for showing up at all.
The Iona Energy Company (US) Ltd. bid nearly $8 million on 38 leases, often competing against multimillion dollar offers from ConocoPhillips, Eni Petroleum, Shell and StatoilHydro, all among the largest oil companies in the world.
Altogether, seven companies made 667 bids totaling nearly $3.4 billion. In the highest bid of the day, Shell bid $105 million to secure drilling rights to just one lease in the Arctic waters off the northwest coast of Alaska.
By comparison, Iona Energy bid only $61,000 for its lone high offer.
“We’re just excited to acquire one block,” Iona Chief Executive Officer Neill Carson told Petroleum News on Feb. 26 from Aberdeen.
Iona Energy is less than a year old, formed in 2007 by Carson and Chief Financial Officer Brad Gunn. The company maintains offices in Aberdeen, Scotland and Calgary.
That one Chukchi lease now makes up the entirety of Iona Energy’s holdings.
“We don’t currently hold any others, but we’re in the process of other sales,” Carson said.
Hoping to start acquiring leases Carson started Iona after several years as the chief operating officer of the Calgary and London-based Ithaca Energy Inc., where Gunn also served as CFO from 2004 until this past January.
Gunn came to Ithaca after nearly a decade and a half in finance, but not in the oil industry. Previously, he owned an online company devoted to real time stock information.
Carson came to Ithaca after heading up an oil and gas consulting company called Carson Resources Ltd., but his primary experience came from more than 20 years with BP and Amoco, focused on offshore assets in the North Sea, but also in the Netherlands, Pakistan and Bolivia.
Ithaca Energy focused on exploration and production in the United Kingdom Continental Shelf in the North Sea, looking for opportunities passed over by larger companies. The company successfully brought several wells into production.
Carson said the business model for his new company is to pick up leases through sales, licensing rounds and divestments. He said Iona is currently in “numerous talks” with major companies over leases.
“Our feeling is that smaller companies can become more nimble,” Carson said.
Iona will focus on offshore assets around the world. Carson specifically mentioned the North Sea, South America and Alaska.
Unlike the North Sea, the Chukchi Sea is an undeveloped basin, but Carson said Iona was attracted to the results of the Burger well drilled back in 1989.
“It seems like a bit further reach to us, but nevertheless the nature of the area kind of appeals to us,” Carson said.
He said future offshore lease sales in Alaska remained “appealing,” but that any involvement depends on the situation at the time. The next federal offshore lease sale in Alaska is the Beaufort Sea sale scheduled for 2009.
Using recently acquired seismic, Carson said Iona plans to evaluate its new Chukchi lease to determine what to do next. He found the high going rate for neighboring leases encouraging, especially considering the lack of interest in previous Chukchi lease sales.
“We’re kind of pleased in some strange way, because the value is recognized by those that won the properties,” Carson said.
That value could come back to bite Iona, though. The U.S. Minerals Management Service is still reviewing all of the bids and could reject any considered below market value.
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