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Vol. 11, No. 30 Week of July 23, 2006
Providing coverage of Alaska and northern Canada's oil and gas industry

AVCG, Ramshorn do JV

Houston-based private equity firm connected with Nabors Industries

Alan Bailey

Petroleum News

Alaska Venture Capital Group and its operating company Brooks Range Petroleum have formed a joint venture with Ramshorn Exploration, a Houston-based private equity company associated with drilling contractor Nabors Industries Inc.

“Ramshorn Exploration has acquired a 25 percent working interest in all of AVCG’s North Slope acreage and exploration prospects,” Ken Thompson, managing director of AVCG, told Petroleum News on July 19. “They’ll also own that 25 percent in all future prospects.”

Thompson said that Ramshorn Exploration has investments in exploration prospects in several different countries.

Substantial lease position

Since 1999 AVCG has established a substantial lease position on Alaska’s North Slope, with oil prospects at Gwydyr Bay, Whiskey Gulch, Ocean Point and Titania in the central North Slope. The company also owns a 10 percent interest in the Pioneer Natural Resources-operated Cronus unit, southwest of the Kuparuk River unit — in May Pioneer announced that its Cronus No. 1 well had struck oil in Jurassic-aged Kuparuk C sands.

In March AVCG confirmed its continuing strategy of investing in oil-prone areas close to existing infrastructure when, in the state’s North Slope areawide lease sale, the company bid on tracts near its Titania, Cronus and Gwydyr Bay prospects.

The company said in January that it was looking for partners to share in the exploration and development costs for its leases. And in March AVCG/Brooks Range Petroleum formed a joint venture with Calgary-based TG World Energy Co. TG World acquired an interest in most of AVCG’s oil and gas leases and agreed to participate in the exploration and development of the leases.

Similar JV to TG World

Thompson said that the joint venture with Ramshorn is similar to that with TG World. Ramshorn has paid cash to AVCG to compensate for a portion of the cost of the land and the cost of exploration work such as seismic acquisition and geological studies.

Once drilling starts, Ramshorn will pay an undisclosed percentage greater than 25 percent of drilling costs, to earn the 25 percent interest in the prospects, Thompson said.

“Ramshorn (also) signed a drilling operating agreement over the central part of the North Slope with us,” Thompson said. “AVCG has named our operations subsidiary, Brooks Range Petroleum, as operator of that joint operating area.” The partnership with TG World also designates Brooks Range Petroleum as operator, he said.

Following the two joint venture agreements, AVCG still retains a 50 percent interest in its acreage. And the company is in discussion with other potential partners, to further spread the exploration risk in the leases.

“That’s two very good partners for AVCG and we’re actually in discussions currently with two more quality companies to see if one, if not both, would join in partnership as well,” Thompson said.

Two wells

Meantime, Brooks Range Petroleum is formulating its exploration plans for next winter. These plans include seismic acquisition and the drilling of two wells.

“We have already contracted with Nabors to drill at least two exploration prospects this winter,” Thompson said. However, Thompson emphasized that Ramshorn’s association with Nabors does not mean that Brooks Range Petroleum has to contract with Nabors for drilling — Brooks Range Petroleum will continue to obtain the best drilling deals that it can, he said.

Thompson said that the two exploration wells will likely be in the Gwydyr Bay area, north of the Prudhoe Bay unit, although the AVCG owners have yet to make a decision on that.

In the past AVCG has described Gwydyr Bay as a single Kuparuk sands prospect. But the company has now identified two prospects in the area, with different surface and bottom hole locations, Thompson said.

“Initially we were just going to drill in one prospect,” Thompson said. “We then acquired seismic and reviewed well records and identified a second prospect.”

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