|
Looking to drill
88 Energy, partners, acquire interest in Great Bear Nanushuk play leases Alan Bailey Petroleum News
88 Energy Ltd., Otto Energy Ltd. and Red Emperor Ltd. are acquiring a collective 90 percent interest in a block of four Great Bear Petroleum leases, 88 Energy has announced. The leases lie to the east of the Horseshoe wells, where Armstrong Energy found oil in the Nanushuk formation in 2017. The lease block is one of four Great Bear lease blocks, for which Alaska’s Division of Oil and Gas recently approved lease term extensions to April 30, 2021 - the leases had been due to terminate at the end of April this year.
As one of its conditions for the term extensions for the four leases, the division requires the drilling of an exploration well by May 30, 2019. The 88 Energy consortium says that it will meet that drilling commitment. The companies are targeting the Nanushuk play, an oil exploration play involving recent major oil discoveries in the nearby Pikka/Nanushuk and Willow trends. 88 Energy says that Otto Energy has used seismic data acquired from the division to identify a prospect in the leases at a depth of about 5,000 feet in the Nanushuk. The prospect has a mean estimated gross size of 400 million barrels of oil, with a chance of success in the range 25 to 30 percent, the company says.
“The Western Block transaction represents a significant opportunity for 88E shareholders to gain exposure to one of the most prospective oil plays available globally, complementing our existing conventional portfolio on the North Slope,” said David Wall, managing director of 88 Energy, referring to the block of four leases. “Preparations are now underway and commencement of drilling of the exploration well is scheduled in less than nine months.”
88 Energy has been investigating the potential for source rock oil development on a fairway of leases straddling the Dalton Highway. The company is also investigating conventional prospects in its acreage.
Ownership interests According to the Rigzone website Otto Energy acquired Borealis Petroleum Pty Ltd in 2015 - Borealis Alaska LLC, a subsidiary of Borealis Petroleum, currently owns a 10.8 percent working interest in the leases in question. The 88 Energy announcement says that the deal with Great Bear will initially involve 88 Energy acquiring a 36.0 percent working interest, Otto Energy (presumably through Borealis) increasing its working interest to 22.5 percent, and Red Emperor acquiring 31.5 percent. All three companies are based in Australia.
The deal involves a payment of $500,000 to Great Bear following execution of the working interest acquisition agreement, and a further $500,000 upon receipt of the permits needed to drill the exploration well, or no later than Dec. 31, 2018. The consortium of Australian companies has also agreed to provide a performance bond of $3 million to the state of Alaska by July 31, 2018. The performance bond was one of the division’s conditions for the extension of the lease terms and will be forfeited if the drilling commitment in the leases is not met.
The deal also gives Great Bear the option to acquire back a further 10 percent working interest in the leases prior to the spudding of the exploration well if Great Bear pays its pro-rata share of the cost of drilling the well. Alternatively, Great Bear can regain that 10 percent within six months of well completion by paying 200 percent of the pro-rata costs.
In the event of Great Bear exercising this “back-in” option, the eventual working interest ownership position would be Great Bear 20 percent, 88 Energy 32 percent, Otto Energy 20 percent and Red Emperor 28 percent.
|
