The joint venture partner Royale Energy announced, but did not name, April 10, is Australia-based Rampart Energy Ltd., listed on the Australian stock exchange as RTD.
The two companies closed their farm-in agreement at the end of May, a deal giving Rampart the ability to earn up to 38,000 net onshore acres of Royale’s 96,000 acre Alaska North Slope holdings that are prospective for both conventional and unconventional oil.
The transaction includes Rampart funding the drilling of two wells with horizontal legs in the Western Block of Royale’s acreage by March 31, 2015. The 10-year leases were issued to Royale by the State of Alaska in December.
Formerly a Vancouver, B.C., geothermal firm called Earth Heat Resources Ltd., in February shareholders approved a change of registration to Australia, followed in April by a change in name to Rampart Energy Ltd., which is more in keeping with its move away from geothermal energy in favor of conventional and unconventional oil and gas opportunities in mature petroleum provinces, specifically regions “that have established infrastructure and sophisticated investment environments,” per documents posted on the company website at www.rampartenergy.com.au
In a first quarter operations report, Earth Heat said the change was spurred by a “lack of investor or overall market interest in the geothermal sector.”
Terms of the agreement
According to a May 27 press release by Rampart, it can earn an initial 10 percent working interest in Royale’s Western Block by paying $3.4 million in two parts, half by June 3 and half by Dec. 1, “as well as the issue of options to Royale to purchase US$1.7 million of Rampart stock at a strike price of 150 percent of the volume weighted average price prior to the signature on the agreement.”
The company can earn an additional 20 percent working interest in the Western Block by acquiring a 3-D seismic survey over both the Western and Central Blocks by March 31, 2014 and the final 45 percent working interest in the Western Block by drilling, testing and completing two wells, including horizontal sections in target formations, by March 31, 2015.
To earn the 75 percent working interest in the Central Block, Rampart must complete the 3-D seismic survey and pay an additional US$1.7 million by June 30, 2014.
Prospectivity, CGG seismic
“Conventional prospectivity of the area is demonstrated by proximity to the Moose Tooth resource (referring to the ConocoPhillips-operated Mooses Tooth first exploration unit in the National Petroleum Reserve-Alaska), estimated to be up to 600 million barrels of oil equivalent, which is about 15 kilometres (9.3 miles) to the northwest of the western farm-in block,” Rampart said in its press release.
“Based on information available, the prospective Jurassic sands which host this resource appear likely to extend into the area to be jointly explored and exploited by Rampart and Royale,” Rampart said.
“The unconventional oil prospectivity of the region is highlighted by the U.S. Geological Survey ranking this as having the second highest estimated recoverable oil resource domestically, behind only the Bakken.”
The “main prospective oil prone regional trend extends through Rampart’s entire farm-in area,” Rampart said.
“Based on the information we have we believe we have Alpine and Brookian sands and maybe Kuparuk. … conventional objectives, along with shale,” Royale Vice President Mohamed Abdel-Rahman told Petroleum News in a recent interview.
When asked when the earliest well would be drilled in the Western Block, he said early 2015, noting that Royale has already entered into a “gentleman’s agreement with CGG” to shoot seismic next winter, starting in January.
Rampart bullish
Rampart, Abdel-Rahman said, is “very bullish on what we showed them in Alaska,” and will be raising money to fund the exploration program on the Australian Stock Exchange.
Royale will remain the operator of its western and central blocks, but that could be re-evaluated should Rampart’s ownership exceed 50 percent, he said, referring to Rampart as an excellent partner for Royale. A larger company might have demanded more control.
In its April press release announcing the joint venture “in principle,” but not naming Rampart, Stephen Hosmer, Royale’s co-chief executive officer, said, “We are pleased to have found a company that shares our vision and optimism for the potential of these important Alaska shale oil resources.”
In February 2012, Royale told Petroleum News it would drill up to six wells — two each on its three leases blocks — but it wanted to find a partner first.
“We have a lot of folks talking to us, a lot of opportunities to pick the right partner,” Hosmer said.
On its Lower 48 properties, Royale has typically sold a portion of its working interest in new leases to third-party investors and bundled prospects into multi-well investments.
“Our model is to partner up with folks; that probably won’t be any different here, but we’re looking for a somewhat different relationship — a technical and strategic partner rather than our traditional model of a group of investors, each with a small piece of the investment,” Hosmer said, adding, “We typically never like to give up operation but that’s open to discussion in Alaska, based on who that partner might be.”
A partner for the company’s Eastern Block of leases has not been selected, Abdel-Rahman said.
San Diego-based Royale entered Alaska in December 2011 by being the high bidder on about 100,000 acres in the North Slope areawide lease sale held by the State of Alaska each year.
—Kay Cashman
