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Royale lands JV partner for source rock Deal would fund 3-D seismic and two horizontal wells on North Slope acreage; partner to be announced as deal moves to closing Eric Lidji For Petroleum News
Royale Energy Inc. has found a partner for its Alaska shale oil program.
Through a joint venture announced April 10, an unnamed company has agreed in principle to pay some $43 million in exploration costs on Royale’s North Slope holdings.
The work would include $38 million for a 3-D seismic program and two horizontal wells on leases the state issued to Royale in December, which the company calls its “Western Block.” Under the deal, the partner would also pay Royale $3,373,659 for the 33,736.59 acres in the Western Block. The deal includes stock options and a right to receive an additional $1.7 million for 17,000 acres in what Royale refers to as its “Central Block.”
“We are pleased to have found a company that shares our vision and optimism for the potential of these important Alaska shale oil resources,” Royale Co-CEO Stephen Hosmer said. “This agreement will allow us to confirm participation in a planned 3-D seismic data acquisition scheduled to take place later this year over our acreage.”
Royale hopes to close the deal by May 30.
Hosmer told Petroleum News Royale plans to name the company once the deal moves to closing.
The San Diego-based company entered Alaska in December 2011 by being the high bidder on more than 100,000 acres in the annual North Slope areawide lease sale.
Partner before drilling In February 2012, the company told Petroleum News it would drill up to six wells — two each on its three leases blocks — within the coming year, but wanted to find a partner first. “We have a lot of folks talking to us, a lot of opportunities to pick the right partner,” Hosmer said, saying Royale wanted a partner with technical expertise in shale plays.
On its Lower 48 properties, Royale has typically sold a portion of its working interest in new leases to third-party investors and bundled prospects into multi-well investments.
“Our model is to partner up with folks; that probably won’t be any different here, but we’re looking for a somewhat different relationship — a technical and strategic partner rather than our traditional model of a group of investors, each with a small piece of the investment,” Hosmer said in February 2012, adding, “We typically never like to give up operation but that’s open to discussion in Alaska, based on who that partner might be.”
Back then, Royale was considering both oil companies and oilfield service firms.
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