Providing coverage of Alaska and northern Canada's oil and gas industry
December 2019

Vol. 24, No.50 Week of December 15, 2019

$19M at lease sales

Armstrong, bidding in NPR-A, accounts for $10.8M, 970,000 acres in west

Kristen Nelson

Petroleum News

Bidders dropped more than $19 million in state and federal North Slope lease sales Dec. 11, with the bulk of the bids, $10.8 million, on exploration acreage by Bill Armstrong bidding as North Slope Exploration LLC in the federal Bureau of Land Management’s National Petroleum Reserve-Alaska.

That sale, which has been a quiet affair in recent years, was exciting this time around, drawing bids on 92 tracts, more than a million acres, with total bids of $11,268,709, BLM Alaska Deputy Director Ted Murphy said at the conclusion of the agency’s online bid opening.

While existing acreage holders did fill in around their positions, both the BLM and state sales - particularly BLM’s NPR-A sale - saw either the establishment of big new exploration tracts or substantial expansion of existing exploration blocks.

The dominant bidder in the NPR-A sale was Armstrong, bidding as North Slope Exploration LLC, with $10.8 million in bids on 85 tracts, more than 970,000 acres west and southwest of existing lease positions in NPR-A, where his companies have not previously bid.

Armstrong has been a major exploration player on the Slope, taking large acreage positions and bringing in partners to explore and develop fields beginning with Oooguruk and Nikaitchuq.

His most recent venture, in partnership with Repsol, produced the Nanushuk discovery at Pikka.

Armstrong recently sold off a position in Pikka to Oil Search, which bought into Pikka in 2017 and acquired the remainder of Armstrong’s interest earlier this year. On the eastern side of the Slope, bidding as Lagniappe, Armstrong picked up a large block of acreage in 2018 and remains in partnership with Oil Search on that acreage, which Oil Search augmented in the state’s North Slope areawide sale.

NPR-A acreage

“We’re back in a big way,” Armstrong told Petroleum News after the sale.

The acreage the company took in NPR-A, bidding as North Slope Exploration, is west of Willow, the big discovery ConocoPhillips has in NPR-A west of Alpine.

“Basically, we jumped over Pikka, over Alpine and over Willow and the ConocoPhillips NPR-A discoveries,” he said.

“It’s super speculative, of course,” Armstrong said of the acreage. “It’s very attractive, but it’s all wildcat ideas. We’ve done a lot of technical work on those ideas but we have more work to do.”

Armstrong has brought in partners on its exploration prospects, but he said there is currently no partner on the NPR-A acreage. Asked about Oil Search, Armstrong said: “We do have a very strong relationship with Oil Search on the North Slope, but this is solely an Armstrong initiative at this time. That’s all I can say right now.”

There were two other bidders in the NPR-A sale.

ConocoPhillips, which has more than a million acres in NPR-A, and is developing two units, Greater Mooses Tooth, already in production, and Bear Tooth, the site of the company’s Willow discovery, picked up three tracts, 33,149 acres, for $246,510. Emerald House LLC, which holds 13 tracts in NPR-A, picked up four tracts, some 57,442 acres, for $259,956.

State sales

The state of Alaska also opened oil and gas lease sale bids Dec. 11. The Alaska Department of Natural Resources’ Division of Oil and Gas received no bids for the North Slope Foothills areawide sale or for the three special areas it offered, the Gwydyr Bay, Harrison Bay and Storms blocks.

The state received a combined $7.8 million in bids for 154,610 acres in the Beaufort Sea and North Slope areawide sales.

In a statement on the sale the division noted that many of the bids were from exploration interests with significant lease positions, “and appear to represent efforts to consolidate opportunities near existing leases into larger contiguous areas.”

Division Director Tom Stokes said in a statement that the number and amount of the bids validate the state’s continuing status as an attractive target for oil exploration and production.

“Current plans of development indicate up to 10 wells will be drilled this winter to confirm the size and reach of oil fields,” Stokes said. “And we’re getting quite a bit of inquiry about permits for 3D seismic work that could direct future exploratory work,” he said, all of which is positive for the state.

The Beaufort Sea areawide sale drew 13 bids on 13 tracts from two bidding groups, Samuel Cade 75% and Daniel Donkel 25%, and Narwhal LLC. Bids on 46,290 acres totaled $1,222,360.

The Cade-Donkel bids, on six tracts, 15,290 acres, for $382,250, were on the eastern side of the Beaufort sale, north of and adjacent to the Point Thomson unit. The two hold positions in some 65,000 acres.

Narwhal LLC, which already holds 31,215 acres, bid on seven tracts in Harrison Bay, 31,000 acres, for $840,110.

North Slope sale

The state drew 56 bids on 56 tracts in the North Slope areawide sale, with 108,320 acres receiving bids totaling $6,581,990.40 from two bidders, Great Bear Petroleum Venture II LLC and Oil Search Alaska LLC.

Great Bear Petroleum appeared to be filling in around existing acreage. It took 17 tracts, 27,840 acres for $849,094.40, with three tracts southwest of the Storms block and the remaining 14 around existing acreage farther south and west.

London based Pantheon Resources, which acquired Great Bear’s Alaska assets in January, said in a Dec. 12 statement: “The new leases are strategically positioned in two areas contiguous or adjacent to our current acreage on our northern and southwestern boundaries.”

Pantheon said it had a competitive advantage in bidding on the acreage “given it owns the proprietary 3D seismic which covers the leases,” seismic not accessible by third parties, and cited technical work completed in recent months.

Oil Search took 39 tracts, 80,480 acres, for $5.73 million, on the eastern side of the Slope, adjacent to acreage acquired by Bill Armstrong bidding as Lagniappe last year.

Oil Search took a 50% interest and operatorship in the 195,200-acre block early this year.

Armstrong discussed the eastern block in an interview with Petroleum News in January:

“It is a very subtle play; that’s why it has been hidden for so long; it doesn’t just jump out at you on seismic. … The amount of running room this concept has is just massive in Alaska. ConocoPhillips is chasing it west, which is great and we like what they are doing a lot, but going east from Pikka we also see the same thing. We’re really excited. It’s still a wildcat play. It still has risk, but it has huge potential,” he said.

He said then that the next step would be 3D seismic.

- Kay Cashman contributed to this story

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