ANWR seismic under SAE restruct? Harpoon wildcat source unknown

Kay Cashman

Petroleum News

Seismic contractor SAExploration’s recent Chapter 11 bankruptcy and its proposed restructuring plan is geared to allow SAE to conduct business as usual. This suggests, but does not guarantee, that SAE will be conducting its 3D seismic survey in the 1002 area of the Arctic National Wildlife Refuge this coming winter as planned, which would might be in advance of the first of the two congressionally mandated federal oil and gas lease sales in the area, neither of which has yet been scheduled.

SAE, Arctic Slope Regional Corp. and Kaktovik Inupiat Corp. in the Inupiat Geophysical Partnership are behind the seismic that was expected to be shot last winter. The program, referred to as the Marsh Creek 3D survey, was to encompass the entire 1002 area and some nearby State of Alaska acreage, totaling about 2,600 square miles.

The tiny 1002 portion of the 19 million-acre refuge is a narrow strip of coastline that was set aside for potential development by Congress because of its hydrocarbon rich geology. (To date, only one well has been drilled in the ANWR 1002 area - the onshore KIC well, drilled in 1985 and 1986 by operator Chevron and partner BP from surface land owned by Kaktovik Inupiat, the Native village corporation for Kaktovik, and into the subsurface oil and gas mineral rights owned by Arctic Slope Regional, the Native regional corporation for northern Alaska.)

The 35-day federal government shutdown that started in December 2018 was the main reason behind the delay in securing a U.S. Fish & Wildlife permit in a timely manner, necessitating a change in dates in the application, SAE told Petroleum News at the time.

“Since the government went back to work, we’ve been working with the agency to make the appropriate changes because there were specific dates in that application that had to change. … By the time we worked through those things it was so late in the season if you put publication in the Federal Register and a 30-day comment period in the timetable, plus, say 15 days after that to process the ITR, you were getting into April and once you mobilize from Deadhorse it takes four days to get to the 1002 border and then another five days to get to the village of Kaktovik … it was just getting too late and we preferred two full winter seasons to do the survey,” then SAE chairman and CEO Jeff Hastings said.

The new F&W Marine Mammal Protection Act incidental take regulation permit would allow seismic contractor SAE to begin its program as early as December 2020 and finish in the spring of 2021.

What does SAE’s management team have to say about its ANWR seismic plans?

Petroleum News sent an email to the team, saying, “As I understand it, SAE still has to file a new plan of operations with the U.S. Bureau of Land Management. Has that been done yet and are you still targeting a start date for the seismic acquisition in December?”

Sarah Marshall, communications consultant for the team, replied in an email:

“We continue to work with our customers to assess and support their needs. Acquiring seismic is an important first step to provide accurate data for safe and efficient exploration. With the current dynamics facing everyone in our industry, we are not able to say when or if we will file permits.”

So, basically that decision has not yet been made - and BLM Alaska region communications director Lesli J. Ellis-Wouters told Petroleum News Aug. 31 that the 2018 seismic application for the 1002 area received from SAE in 2018 still needed an updated plan of operations which had not yet been received from the company.

Both SAE and BLM’s replies are unsurprising given the amount of time that has passed since Houston-based SAExploration Holdings Inc. and four affiliated companies filed for Chapter 11 protection in in the U.S. Bankruptcy Court’s Houston Division on Aug. 27. (The filing was preceded by months of negotiations.)

On Aug. 31, SAE announced that it and certain of its subsidiaries have entered into a Restructuring Support Agreement, or RSA, “with holders of 100% of the advances under its credit facility, holders of approximately 82.4% of the advances under its senior loan facility and holders of 100% of its outstanding 6.0% Senior Secured Convertible Notes due 2023. The parties to the RSA also hold in the aggregate approximately 67.4% of the outstanding equity interests of the Company (including outstanding warrants but excluding outstanding the Convertible Notes) on a fully diluted basis.”

During the restructuring process, SAE said it expects to maintain global business as usual. The company has filed “customary motions” that will allow it to maintain employee wages and benefits as well as meet vendor agreements and pay expenses. Also, it said SAE will continue to be led by the current executive management team.

“After several months of careful consideration of how best to navigate the uncertainty of the global economy due to the coronavirus pandemic, along with the decreased demand for oil, our debt levels, and the difficulties associated with monetizing Alaskan tax credits, SAE’s Board of Directors and management, along with our advisors, concluded that the best path forward for SAE and its stakeholders is to seek Chapter 11 protection,” said Mike Faust, SAE’s CEO.

“Our industry has been hit hard. However, the good news is, we expect to operate seamlessly during the restructuring, retain employees and pay our expenses. Our management team should remain in place. Once we emerge from Chapter 11, we expect to be well positioned for growth and to continue meeting the needs of our customers.”

- KAY CASHMAN

Harpoon wildcat source unknown

Not being a subscriber to the publication, Petroleum News could not check out the drilling report but in case we missed something, we emailed ConocoPhillips Alaska spokeswoman Natalie Lowman.

Later that day, Lowman replied: “We have released no new information on Harpoon since it was mentioned in the last earnings call. I do not know where this info came from.”

So those of you who are hungry for more information on the one Harpoon well that was drilled last winter before ConocoPhillips shut down drilling due to COVID concerns, there doesn’t appear to be any new official information available.

But if you know of any, please get in touch at the email below.

- KAY CASHMAN, [email protected]