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Vol. 19, No. 32 Week of August 10, 2014
Providing coverage of Alaska and northern Canada's oil and gas industry

AVCG sells properties

Three-company consortium buys stake in Alaska assets for $450 million

Eric Lidji

For Petroleum News

A new three-company partnership is buying a major stake in the Alaska holdings of AVCG LLC and Ramshorn Investments Inc., the parties announced Aug. 5.

In a $450 million deal, Thyssen Petroleum North Slope Development LLC, JK Tech Holdings Ltd. and MEP Alaska LLC have acquired a 90 percent interest in the Alaska oil and gas business of the two North Slope independents. Through the sale, the partnership will also acquire the local operating company Brooks Range Petroleum Corp. outright.

The deal includes $100 million in cash and more than $350 million for an initial development program at the Mustang field at the Southern Miluveach unit. The partners plan to announce details of the program later this year, but Brooks Range Petroleum Chief Operating Officer Bart Armfield said the companies expect to start work on a 15,000-barrel per day processing facility and drill three production wells later this year.

Although the initial development commitment is focused on the Southern Miluveach unit, the sale also includes AVCG’s and Ramshorn Investments’ stake in exploration prospects across the North Slope, including the Tofkat and Kachemach units between the Kuparuk River unit and the Colville River, the Beechey Point unit north of Prudhoe Bay and a package of leases on the eastern North Slope near the Savant-operated Badami unit.

“Alaska attracted us because it remains a world-class hydrocarbon basin with considerable untapped potential, near existing infrastructure and because the Parnell Administration has created a very attractive investment climate for independent oil and gas companies,” Thyssen Petroleum CEO Hamid Jourabchi said in a statement.

Armfield said the recent changes to the Alaska fiscal regime instituted through the More Alaska Production Act had a “definite impact on this” deal. While much of the public conversation about the necessity of those changes has focused on the largest North Slope producer, Armfield said, the deal proves that the law “does affect the small guys as well.”

The players

The Alaska Venture Capital Group became one of the most active Alaska exploration companies over the past 15 years by assembling joint ventures of small independents.

The new deal replicates that model for development.

Thyssen Petroleum North Slope Development LLC is a subsidiary of Thyssen Petroleum LLC, a privately owned oil and gas exploration company based in the British Virgin Islands, with offices in Monaco and Houston and operations in the U.S. Gulf Coast.

The Singapore-based technology company JK Tech Holdings Ltd. was founded in 1990 to provide products and services to businesses, schools and governments in the country. But in April 2014, the company announced plans to expand into the oil and gas sector by partnering with SF Ventures Pte. Ltd. and Ezion Holdings Ltd. Through the deal, JK Tech Holdings issued 13 million shares to SF Ventures and 42 million shares to Ezion, and created a wholly owned oil and gas subsidiary called JK E&P Group Pte. Ltd.

Ezion Holdings is already an active investor in Alaska.

In 2011, the Singapore-based marine company Ezion partnered with Buccaneer Energy Ltd. and AIDEA and to acquire a jack-up rig for use in shallow offshore waters of Alaska, particularly in Cook Inlet. Earlier this year, Buccaneer sold its stake in Endeavour jack up rig to Teras Investments Pte Ltd., a wholly owned subsidiary of Ezion.

In May 2014, AIDEA and the Ezion affiliate CES Oil Services Pte. Ltd. partnered to fund a nearly $225 million oil processing facility to support operations at the Mustang field.

The third partner in the deal, MEP Alaska LLC, is a newly created subsidiary of Magnum Energy Partners LLC, a relatively new exploration company based out of New York City.

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