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THE EXPLORERS 2006 - Brooks Range picks up third partner AVCG, its operating subsidiary, TG and Ramshorn snag Calgary-based Bow Valley for North Slope assets Kay Cashman Petroleum News
North Slope partners Alaska Venture Capital Group, its operating subsidiary Brooks Range Petroleum, TG World Energy and Ramshorn Investments have acquired another partner for their North Slope oil and gas acreage and exploration plans.
Calgary-based Bow Valley Energy Ltd. said Oct. 23, 2006 that its has signed a joint venture agreement under which it will participate in the 2006-07 winter exploration program and “pay 28 percent of specified capital expenditures in exchange for a 20 percent working interest in lands owned by AVCG,” the partner in the group that initially acquired the oil and gas leases and put the consortium together.
Bow Valley said it has also agreed to pay certain capital costs previously incurred by AVCG.
Robert G. Moffat, president and chief executive officer of Bow Valley, said the joint venture “is a first step in establishing Alaska as a major production and revenue contributor to Bow Valley’s operations.”
Bow Valley is the third joint venture partner to sign on with Brooks Range and its parent company in the last year. TG World and Ramshorn, an affiliate of Nabors Industries, were the first two.
In an email to Petroleum News on Oct. 24, 2006, AVCG managing director Ken Thompson explained the financial arrangement between all the partners. He said, “Our partners — TG World Energy, Ramshorn Investments and Bow Valley Energy — through the promotes they pay will pick up most, but not all, of the consortium group’s exploration expenses on items like seismic and exploration drilling for at least the next four exploration wells. AVCG/Brooks Range Petroleum will generally pay an average 25 percent share or so in new oil and gas lease purchase amounts. Brook Range Petroleum’s share of seismic and exploration drilling for the next three winter seasons is nominal compared to the total. However, for the development phase of any discovery, AVCG will have a 20-30 percent share in oil reserves and production and in development costs, with working interest in development varying across the different prospect areas.”
$41.3 million exploration budget Thompson said Brooks Range was “fully funded for exploration for the next three years. Upon discovery, depending on the discovery size, AVCG may have to obtain additional investment funding for development. Some energy investment firms have voiced interest already when we’re successful.”
Bow Valley said the “co-venturers have approved a budget of US$41.3 million for 2006 and calendar year 2007, which encompasses the cost of drilling two wells and acquiring seismic. A third well may be drilled if conditions permit.” (See North Slope exploration update on page 10 of the Oct. 22, 2006 edition of Petroleum News.)
In its Oct. 23 press release, Bow Valley, an independent oil and gas producers with operations in western Canada and the U.K. sector of the North Sea, noted that its farm-in acreage on the North Slope acreage is “in close proximity” to major producing oil fields such as Prudhoe Bay.
“Participation in this joint venture represents a major initiative to expand the company’s business into new international jurisdictions,” Moffat said. “Alaska is a politically stable jurisdiction, it has an attractive fiscal regime and there is significant exploration potential remaining within close proximity to existing infrastructure. We believe this opportunity is similar to the offshore U.K. where the company has been extremely successful in establishing a significant production base by pursuing smaller opportunities that are no longer considered material to the established major oil companies operating in the area.”
Established in 1996, Bow Valley’s current U.K North Sea production is about 700 boe per day. In western Canada the company’s output is approximately 1,700 barrels of oil equivalent per day.
Bow Valley has another 1,000 boe per day of “predominantly natural gas potential behind pipe which can be tied-in between now and early in the new year” in western Canada, Moffat said.
On Oct. 23, Bow Valley said it had closed a US$150 million debt facility with the Bank of Scotland that would fund its share of capital expenditures to develop four U.K. North Sea fields at Enoch, Blane, Chestnut and Ettrick. The facility was also expected to cover ongoing capital requirements for the U.K. North Sea Kyle field and some exploration.
Moffat said the four projects were expected to yield 7,950 net boe per day over the next 18 months.
Bow Valley’s web site is www.bvenergy.com.
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