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Aurora, Marathon trade gas assets; Aurora forms development company
Kristen Nelson
Aurora Power Resources Inc. said Jan. 7 that it has agreed with Marathon Oil Co. to trade natural gas assets in Cook Inlet and is forming a limited liability company for exploration and development.
Aurora will convey its working interests in the Kenai and Cannery Loop gas fields in exchange for Marathon's ownership in the Nicolai Creek unit. The companies also reached agreement on a seismic data licensing agreement and a natural gas purchase and sale agreement, Aurora said.
At the end of the December, prior to the trade, Aurora had some 7,100 acres in state oil and gas leases.
G. Scott Pfoff, president of Aurora, said the transaction was integral to Aurora's strategy to become a significant producer of natural gas in Cook Inlet.
"We essentially traded a modest quantity of proved developed producing reserves at Kenai and Cannery Loop for a larger quantity of proved undeveloped reserves at Nicolai Creek," Pfoff said. "We feel that this agreement makes sense for both companies, as Aurora is confident that the Nicolai Creek unit has upside potential for additional reserve discovery and can be economically developed. Likewise, Marathon gains complete ownership of the working interest in the Kenai and Cannery Loop fields."
The Nicolai Creek gas field was discovered in 1966. Alaska Oil and Gas Conservation Commission reports show three suspended wells and five abandoned wells in the field. The commission estimates reserves at 2 billion cubic feet.
Aurora acquired the natural gas reserves and associated working interests in the Kenai and Cannery Loop gas fields from Chevron USA in July 1998. Terms of that transaction were not disclosed, but Pfoff said it involved cash, seismic data and certain modifications to the existing arrangements between the companies to purchase and sell natural gas.
Clifford, Jones to head new company Pfoff said that Aurora Power is in the process of forming a limited liability company, Aurora Gas L.L.C., for the company's exploration and production holdings. Aurora Power Resources Inc. will own 50 percent of Aurora Gas. The other 50 percent will be held by Orion Resources L.L.C., a newly formed company headed by Andrew Clifford and Edward Jones.
“These gentlemen,"” said Pfoff, “bring the E&P technical expertise Aurora needs to develop Nicolai Creek and to pursue similar opportunities in the Cook Inlet.” Clifford was formerly vice president exploration with BHP Petroleum; Jones was formerly vice president production with BHP Petroleum.
New vice president, office location Aurora Power recently elected Lauren D. Colas as vice president, replacing Mary Ann Pease who accepted a position with Alaska Communications Systems.
The company has also relocated its Anchorage office to 1029 W. Third Ave., Ste. 220, Anchorage, AK 99501. The phone number remains (907) 277-1003.
The company said its cumulative natural gas sales have exceeded 21 billion cubic feet since it began sales in October of 1994.
"We are very pleased with the rapid growth of our natural gas marketing business in Alaska," Pfoff said. "Our total revenues for year 1999 will exceed $21 million and we anticipate that with a full year of our Department of Defense contract, our 2000 revenues will approach $28 million."
Aurora Power is a privately held Alaska company with offices in Anchorage and Houston, Texas. The company markets natural gas to industrial and commercial customers in Southcentral Alaska.
The company, originally Aurora Gas Inc., was formed in 1994 to market gas in Cook Inlet, buying it from producers and selling directly to large customers.
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