Exxon/Mobil merger gives Exxon 59.72 percent interest in Point Thomson

Kristen Nelson

On Nov. 30, the state Department of Natural Resources Division of Oil and Gas denied Exxon’s request to add a lease to the Point Thomson unit (see story on page A19). Unit owners had twice denied Exxon’s request to add the lease to the unit, but that was before Exxon Corp. announced plans to merge with Mobil Oil Corp.

There are 24 companies or individuals with working interest ownership at Point Thomson, five of whom hold a combined share of more than 97 percent: Exxon 46.26 percent; Chevron U.S.A. Inc. 19.25 percent; Mobil 13.46 percent; Phillips Petroleum Co. 11.09 percent; BP Exploration (Alaska) Inc. 7.36 percent. The remaining 19 working interest owners each have less than 1 percent ownership. With the recently announced Exxon-Mobil merger, however, Exxon will control 59.72 percent of acreage in the unit.

Could Exxon now control the outcome of a vote to add a lease? It needs 65 percent approval to add a lease to the unit. It received 58.55 percent of the vote in the past (including its own 46.26 percent), picking up 12.29 percent from other owners. Since Mobil has a 13.46 percent interest, if Exxon can continue to garner 12.29 percent from other owners, its own interest plus Mobil’s plus the 12.29 percent it has garnered in the past would give it 72 percent, considerably more than the 65 percent it needs to add a lease to the unit.

The Point Thomson unit was approved by the state in 1977 to cover 18 state oil and gas leases — approximately 40,768 acres. The Point Thomson No. 1 well was certified by the state on Nov. 4, 1977, as capable of producing in paying quantities. A first unit plan of development was approved May 28, 1978.

The unit owners requested, and were granted, a unit expansion in 1984, requiring that two wells be drilled, one by March 31, 1985, and another by Feb. 1, 1990. The first expansion area included 25 leases, some 94,152 acres, for a total unit area of approximately 134,920 acres. In 1985, two leases were contracted out of the unit because the required 1985 well was not begun; in 1990, nine leases were contracted out of the unit because the second well was not begun as required.

There are currently 32 leases in the unit, some 83,825 acres, including leases issued in 1965, 1969, 1970, 1980 and 1982. The leases have been extended by their inclusion in the unit.

“Some of these leases are over 30 years old,” Ken Boyd, director of the state Department of Natural Resources Division of Oil and Gas, noted in the state’s decision, “yet no hydrocarbons have been produced.”