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Week of October 31, 2010
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Great Bear on slope

New independent player takes 105 tracts, more than half a million acres

Kristen Nelson

Petroleum News

There is a new independent on Alaska’s North Slope — one with a big new acreage position, history in Alaska and some new ideas for pulling production from a large swath of land south of Kuparuk and Prudhoe Bay.

Newcomer Great Bear Petroleum LLC made a big showing at the Oct. 27 Alaska North Slope areawide lease sale, taking 105 tracts, more than half a million acres, with more than $8 million in apparent high bids.

The total for the sale was 129 tracts sold, 602,880 acres, and $8,811,226.40 in apparent high bids. Bids per acre ranged from the minimum of $10 to $22.77 on a few tracts; per acre bids averaged $14.62.

Great Bear’s share of apparent high bids, $8,138,196, was 92 percent of the high bid total.

The other large bidder in the sale was Daniel K. Donkel, who took 22 tracts, some 60,800 acres, for $608,000.

AVCG and ConocoPhillips Alaska each took a single tract.

The North Slope areawide sale was held in conjunction with the North Slope Foothills areawide sale — for which the state received no bids — and the Beaufort Sea areawide sale, which drew $702,822.40 on 21 tracts, some 70,400 acres.

Donkel was the big bidder in the Beaufort sale, with $390,400 in apparent high bids for 13 tracts. GMT Exploration Co. LLC took eight tracts for $312,422.40.

There was almost no spread in the per-acre bid prices, with Donkel bidding $10 an acre and GMT bidding $10.17 an acre; the average per-acre bid for the Beaufort sale was $10.07.

Great Bear will cull tracts

Ed Duncan, Great Bear’s president and COO, said after the sale that he didn’t target 100 percent success — the company took every tract on which it bid — and said they’ll have to cull some tracts to get below the state’s 500,000-acre limit for acreage in the sale area.

The tracts Great Bear took are primarily a large block south of Kuparuk and Prudhoe.

Division of Oil and Gas Director Kevin Banks said after the sale that the Great Bear sweep was somewhat analogous to last year’s North Slope sale, when Denver-based Armstrong, bidding as 70 & 148 LLC, took 68 tracts (it bid on 69) of 80 at the sale, for $7.6 million in apparent high bids of a sale total of just over $8 million. The 70 & 148 acreage is also a large block of acreage south of Kuparuk, west and southwest of the majority of tracts Great Bear acquired.

Duncan said he and Bob Rosenthal, the company’s vice president of new ventures, have both worked in Alaska in the past and have a good understanding of petroleum systems on the North Slope.

He said Great Bear believes “there are expansive new plays” in the area of its leases and expects “through the success of our program and the exploitation of the North Slope’s resource plays that we’re going to establish long-term, growing and stable production in the state.”

He said the industry seems to have a “general malaise” toward the North Slope and toward Alaska, but Great Bear has “almost polar opposite positions, it appears.”

“We’re very bullish,” Duncan said.

Five principals

There are five principals in Great Bear Petroleum, Duncan said, and while only he and Rosenthal have worked in Alaska, he said all of the principals are long-time colleagues.

Duncan and Rosenthal started working Alaska in the late 1970s, he said, Rosenthal initially with Exxon; starting in 1982 the two worked together at Sohio (BP’s predecessor in Alaska).

Plans for Great Bear came together earlier this year, Duncan said.

“We have new ideas, a very high-level working knowledge — expert knowledge — of the petroleum systems of the Slope,” he said.

“We believe that there are expansive new plays and we’ve captured a very significant piece of what we came here to do” in the sale, he said, characterizing the company’s bids as “purposed; it clearly wasn’t just rank speculation or checkerboard leasing.”

The company currently has an office in Austin, Texas, and will work from there until it gets set up in Alaska, but plans to open an Anchorage office. Duncan said he and Karen Bryant Duncan, the firm’s vice president-corporate and general counsel, will be relocating to Anchorage in the spring.

North Slope acreage

In the North Slope areawide sale Great Bear took a block of four tracts east of the Colville River, adjacent to AVCG and 70 & 148 acreage, and a block of five tracts surrounded by 70 & 148 and Union Oil acreage south of Kuparuk. There are old ARCO wells on the tracts.

The majority of Great Bear’s 105 tracts, however, are a fairly contiguous block farther south of Kuparuk containing a number of old wells.

The acreage which Donkel took in the North Slope sale includes a dozen leases in a block between Prudhoe Bay to the north and Great Bear leases to the south; half a dozen leases southwest of Badami; one lease south of Point Thomson; and three leases west of ANWR.

The tract which AVCG picked up is in the midst of acreage it holds south of Point Thomson on the eastern side of the North Slope and the tract ConocoPhillips took is in the Nuiqsut area on the west side, adjacent to the Colville River unit which it operates.

Beaufort acreage

The Beaufort Sea acreage on which Donkel was apparent high bidder includes three tracts off the Arctic National Wildlife Refuge, six tracts off Badami and four tracts off Liberty.

The tracts off ANWR are an eastern extension of a block of state tracts in which Donkel is a partner with Samuel H. Cade.

The two recently sold a large block of Cook Inlet tracts to Apache Petroleum. Prior to this sale Donkel had some 28,000 acres of state oil and gas leases.

Denver-based GMT Exploration, a partner with Armstrong Cook Inlet on the Kenai Peninsula, acquired 10 Beaufort Sea leases in the Feb. 24, 2010, Beaufort Sea areawide sale with high bids totaling $540,806.

Those included tracts adjacent to Oooguruk and a block of eight tracts north of the National Petroleum Reserve-Alaska and north of ConocoPhillips Alaska-Anadarko state acreage west of the Colville River unit.

The leases GMT took at the Oct. 27 sale extend that block of tracts to the west.

GMT also has working interest ownership in central North Slope leases owned by 70 & 148.

Prior to the Oct. 27 sale, GMT had 85,885 acres of state oil and gas leases, 64,421 acres onshore and 21,363 acres offshore.

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