State formalizes Tofkat ownership deal

Lease transaction makes 2014 trade official; state also approves deal involving Royale and 70 & 148 and other transactions

ERIC LIDJI

For Petroleum News

The partners in a multiparty joint venture operated by Brooks Range Petroleum Corp. have officially swapped working interest and royalty interest stakes at the Tofkat unit.

The net result of the transaction is that AVCG LLC, Ramshorn Investments Inc. and Brooks Range Development Corp. have essentially transferred ownership of the unit to Caracol Petroleum LLC, TP North Slope Development LLC and MEP Alaska LLC.

In mid-2014, after working together for years with various other joint venture partners, AVCG and Ramshorn Investments sold a 90 percent stake in their Alaska holdings and 100 percent interest in their operating arm Brooks Range Petroleum for $450 million to Caracol Petroleum, TP North Slope Development and MEP Alaska. The current transaction is connected to that previous effort. While the transaction was recorded in early November 2015, it was retroactively effective to the beginning of August 2014.

While approving the transfer of working and royalty interests among the six companies, the state denied accompanying requests to separate overriding royalty interests.

The transaction included all the leases at the Tofkat unit, as well as some nearby leases.

Through various joint ventures, AVCG and Ramshorn Investments drilled the 13,174-foot Tofkat No. 1 exploration well and two sidetracks at the unit in early 2008 and commissioned a 210-square-mile 3-D seismic survey over the region. The companies estimated that the Tofkat prospect held about 40 million barrels of recoverable oil in the Kuparuk C sands and another 20 million in the Jurassic sands. Following that program, the companies focused on other prospects in their portfolio. As of earlier this year, the state had yet to decide whether to terminate the unit or extend the terms of the leases.

Royale trade

The transaction included three deals. Rampart Alaska transferred a 30 percent working interest and royalty interests ranging from 25 percent to 26.25 percent in the leases to Royale. The two companies had been involved in a joint venture to explore the acreage until Rampart left the project. Then, Royale transferred 100 percent working interest and royalty interests ranging from 83.33333 percent to 87.5 percent to 70 &148. Finally, 70 & 148 transferred a 1.33333 percent royalty interest in the leases back to Royale.

In the central North Slope, Ursa Major Holdings LLC transferred its working interest in 34 leases to Great Bear Petroleum Ventures II LLC (89.2 percent) and Borealis Alaska LLC (10.8 percent). In turn, Great Bear transferred a 10.8 percent and 8 percent working interest in the leases to Borealis Alaska. Both deals also included royalty interests.

At the Point Thomson unit, the state approved the transfer of working interest and royalty interest over many of the leases at the unit from Exxon Mobil Corp. to ExxonMobil Alaska Production Inc. and also approved smaller assignments from smaller investors.

Ormat surrenders

Earlier this year, the subsidiary of Ormat Technologies ended its long-running effort to find a viable geothermal energy resource on the flanks of the Mount Spurr volcano.

The company acquired the leases for $3.5 million in a September 2008 geothermal lease sale and drilled core holes in the region in 2010 and 2011. The results were unfavorable, and while the company suggested it might return, it ultimately cancelled the program.

In Cook Inlet, NordAq Energy Inc. transferred a 0.1 percent royalty interest in ADL 391596 to independent investor Chas Taylor. In the Alaska Peninsula, the state terminated ADL 392630, held by Auxillium Alaska Inc. for failure to pay rent.

—A copyrighted oil and gas lease map from Mapmakers Alaska was a research tool used in preparing this story.