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Major deals prompt lease transactions Miller, Apache, Repsol, ExxonMobil and others have numerous lease transactions in first quarter as strategies change ERIC LIDJI For Petroleum News
As Miller Energy Resources Ltd. emerges from bankruptcy proceedings the company has been refining its Alaska portfolio by failing to pay rent on many leases in its holdings.
In December, the state terminated four Cook Inlet Energy LLC leases. ADL 392478, ADL 392479 and ADL 392480 were onshore leases on the west side of Cook Inlet near the Trading Bay unit. ADL 392495 was in the southern Kenai Peninsula near Homer.
In January, the state terminated 27 leases operated by Cook Inlet Energy in the Susitna basin. The company had previously converted a portion of a Susitna basin exploration license into leases but never followed through on a multi-well exploration program.
In March, the state terminated seven more Cook Inlet Energy leases. The leases were located in three clusters. The first included ADL 392623, ADL 392396 and ADL 392397 at the northern end of the west side of Cook Inlet, near the company’s Otter unit. The second included three irregular leases - ADL 391613, ADL 391614 and ADL 391615 - occupying the path of the Beluga River west of the Beluga River unit. The third was ADL 391608, a coastal lease on the west side of Cook Inlet, near the Trading Bay unit, and had been home to the Inexco Oil Co.’s West McArthur River No. 1 well.
The state recently formalized Apollo Investment Corp. and Highbridge Capital Strategies acquisition of Miller Energy Resources Ltd as part of bankruptcy proceedings. The sale impacts properties owned by subsidiaries of Cook Inlet Energy and Savant Alaska LLC.
The state is considering separate requests from the estate of Elizabeth Wickham and the estate of Fred L. Wickham Jr. to transfer small royalty interests in five Cook Inlet Energy leases at the Redoubt unit to Donald H. Wickham. The interests are less than 1 percent.
Apache refines Earlier this year, Apache Alaska Corp. announced plans to suspend its Alaska exploration program and allow its leases to expire. The state terminated 15 Apache leases in March for failure to pay rent. The leases were scattered across the entire Cook Inlet basin.
ADL 391591 was adjacent to the Kasilof unit and included many of the early development wells for the unit, which operator Hilcorp Alaska LLC recently terminated.
ADL 391600, ADL 391601 and ADL 391602 were offshore leases adjacent to the Trading Bay unit and included the ARCO West Foreland Unit No. 5 well and West Foreland Unit No. 5A sidetrack. The leases were set to expire on Feb. 28, 2018. ADL 391610 was an offshore lease east of the North Cook Inlet unit and scheduled to expire Feb. 28, 2018. ADL 391612 was an onshore lease to the north, adjacent to the Pretty Creek unit and scheduled to expire Feb. 28, 2018. ADL 391616 and ADL 391617 were onshore leases near the mouth of the Susitna River and scheduled to expire Feb. 28, 2018.
ADL 392634, ADL 392636, ADL 392637, ADL 392638 and ADL 392639 were offshore leases in the waters west of the Ninilchik unit and scheduled to expire Feb. 28, 2025.
ADL 392653 was north of the Birch Hill unit. ADL 392661 was a non-contiguous lease south of the Deep Creek unit. Both leases were scheduled to expire on Feb. 28, 2025.
The state terminated three other leases in March for failure to pay rent. ADL 392664, held by independent investor Wanda Kennedy, was a non-contiguous lease surrounded the Cook Inlet Energy-operated North Fork unit on two sides and was scheduled to expire Feb. 28, 2025. ADL 391595 was an offshore lease held by independent investor Daniel K. Donkel and other partners in Redoubt Bay and scheduled to expire Feb. 28, 2018. ADL 391596 was a coastal lease held by NordAq Energy Inc. near its Shadura prospect.
Point Thomson deals With the ExxonMobil-operated Point Thomson unit moving toward production, the numerous leaseholders at the eastern North Slope unit have been making deals.
In December 2015 and January 2016, the state approved the transferred of small working and royalty interests in leases at the unit between ExxonMobil Alaska Production Inc. and many of the leaseholders including BP Exploration (Alaska) Inc., ConocoPhillips Alaska Inc., numerous smaller companies and individual investors. In turn, many of those companies are transferred interests back to ExxonMobil or amongst themselves.
Repsol transfers The state has been gradually formalizing a realignment of interests between Repsol E&P USA Inc. and its partners Armstrong Oil & Gas Inc. and GMT Exploration Co. LLC.
In January, the state approved the transfer of a 15 to 45 percent working interest and 12 to 37.5 percent royalty interest in approximately 195 leases on the North Slope and in the Beaufort Sea from Repsol to the Armstrong subsidiary 70 & 148 LLC. The transfers included the Qugruk and Pikka units. (The companies hold vast amounts of acreage and the interests vary for development and exploration acreage included in the deal.)
In February, 70 & 148 transferred 11.25 percent working interest and between 9 and 9.84375 percent royalty interest in approximately 121 North Slope leases to GMT Exploration. In March, the state approved the transfer of a 45 percent working interest and 36 to 39.375 percent royalty interest in 54 leases from Repsol to 70 & 148.
West Nicolai traded In January, Buccaneer Alaska LLC transferred 100 percent working interest and 80.25 percent royalty interest in two Cook Inlet leases to AIX Energy LLC. The leases - ADL 391609 and ADL 391611 - are west of the Nicolai Creek unit. Buccaneer acquired the leases through its initial acquisition of the Cook Inlet assets of Stellar Oil & Gas LLC in early 2010 and called the prospect West Nicolai Creek. Although the company often discussed plans to explore the region, the program had not come to fruition by the time Buccaneer filed for bankruptcy protection and was eventually acquired by AIX Energy.
Other lease transactions • In late December 2015, Anadarko Petroleum Corp. surrendered 29 leases in the foothills of the Brooks Range Mountains. At the end of January 2016, Anadarko lost 11 more leases in the area to expiration. The company has been relinquishing leases for years.
• In December, the state terminated 12 leases operated by Royale Energy Inc. for failure to pay rent. The leases were in the central North Slope south of the Prudhoe Bay unit.
• In January, the state approved a transfer of interests at a former NordAq Energy Inc. prospect in Smith Bay. The company transferred a 10 percent working interest and small royalty interest in the leases to L 71 Resources Inc. and a 5 percent working interest and small royalty interest in the leases to Doyon Limited. NordAq Energy eventually transferred majority ownership in the prospect to Caelus Energy Alaska Smith Bay LLC, which recently completed a two-well exploration program in the area this past winter.
• In January, HVA Royalties Inc. transferred a small royalty in two leases - at the Milne Point unit on the North Slope and the West McArthur River unit in Cook Inlet - to HVA Limited Partnership. The royalty interests were in values of less than 1 percent.
• In January, independent investor Shawn Bartholomae asked to transfer a small royalty interest in leases at the Kitchen Lights unit to John Campbell, Larry D. Kelley and Dan Kong Chen. The transferred royalty interests were all in values of less than 1 percent.
• The Alaska Energy Alliance Inc. lease ADL 391346 also expired earlier this year. The offshore lease was adjacent to the Kitchen Lights unit, in the waters of Cook Inlet
• In February, five Brooks Range Petroleum Corp. leases expired retroactive to May 31, 2014. The leases were between the Southern Miluveach and Kachemach units and had been under discussion for joint exploration with the ASRC Exploration LLC Placer unit.
—A copyrighted oil and gas lease map from Mapmakers Alaska was a research tool used in preparing this story.
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