Alaskan exploration acreage, operating field change hands

ASRC acreage involved in Anadarko agreement [119,179 bytes] Petroleum activity in Alaska is in no danger of waning, with renewed talk of leasing in the National Petroleum Reserve-Alaska (NPR-A) and recent lease sales onshore and in the Beaufort Sea (OGJ, Aug. 10, 1998, p. 24). Now, in separate deals, exploration rights to a vast leasehold on Alaska's North Slope have changed hands, and interest in a producing field in Cook Inlet has been acquired.

Aug. 24, 1998

4 min read

ASRC acreage involved in Anadarko agreement [119,179 bytes]

Petroleum activity in Alaska is in no danger of waning, with renewed talk of leasing in the National Petroleum Reserve-Alaska (NPR-A) and recent lease sales onshore and in the Beaufort Sea (OGJ, Aug. 10, 1998, p. 24).

Now, in separate deals, exploration rights to a vast leasehold on Alaska's North Slope have changed hands, and interest in a producing field in Cook Inlet has been acquired.

Anadarko Petroleum Corp., Houston, acquired from Arctic Slope Regional Corp. (ASRC), Anchorage, the right to explore 3.3 million acres. And Cross Timbers Oil Co., Fort Worth, agreed to acquire Shell Oil Co.'s Cook Inlet properties, including the offshore platforms and related facilities in Middle Ground Shoal field.

Anadarko's acquisition

Anadarko signed an agreement with ASRC giving Anadarko the right to evaluate 2.3 million acres and to lease prospective acreage for further exploration.

Anadarko says the deal gives it access to more Alaskan lands for exploration than any oil company operating in the state. Terms of the agreement were undisclosed, but future phases of the arrangement will be based on a work commitment by Anadarko.

Anadarko also has exploration rights to an additional 1 million acres of federal land now administered by the Bureau of Land Management. ASRC eventually will claim title to about 240,000 of those acres as part of its land selection rights under the Alaska Native Claims Settlement Act.

Anadarko now has exploratory access to as many as 3.3 million acres controlled by ASRC (see map).

John N. Seitz, Anadarko executive vice-president of exploration and production, said, "Alaska is now a core area for Anadarko, and we have exploration programs under way in three major hydrocarbon basins: the North Slope, the Cook Inlet, and the Foothills region."

In State Lease Sale 87, held in June (see related story, p. 24), Anadarko acquired 26 tracts for $8.1 million (net). Of these, 20 are held by Anadarko alone, and 6 are held in partnership with Fina Inc.

"The ASRC acreage in the Foothills is intermingled and adjacent to some of these recently acquired state lands," said Anadarko.

Anadarko hopes to continue its exploration of Alaska by participating in a federal lease sale planned for NPR-A (see related story, p. 26). The company believes that "the potential to discover commercial reserves exists in NPR-A." It has been acquiring proprietary seismic data there during the past three winter exploration seasons.

"Anadarko commends Gov. (Tony) Knowles and the efforts by Alaska state agencies for their leadership in helping to develop this leasing scenario," said Anadarko. "Industry has proven its ability to operate in sensitive environments. Anadarko is currently reviewing the final environmental impact statement issued by the Bureau of Land Management and will be making comments in the next 30 days."

Cross Timbers' deal

Cross Timbers has entered into a definitive agreement with Shell to acquire its interest in Middle Ground Shoal field in Cook Inlet. In exchange, Shell will receive 2 million shares of Cross Timbers common stock through a series of transactions.

The deal marks Cross Timbers' entry into Alaska operations. It includes Shell's 100% interest in two state leases, plus two operated production platforms in 70 ft of water and a 50% interest in certain operated production pipelines and onshore processing facilities.

Cross Timbers estimates proved reserves attributable to the acquisition at 12 million bbl. Current net production is 3,600 b/d from 31 wells. Production is primarily from multiple zones in Miocene-Oligocene Tyonek at 7,300-10,000 ft. Estimated field life is 9 years.

Early in 1999, Cross Timbers plans to register the 2 million shares for possible resale by Shell.

Under terms of the agreement, Cross Timbers is also obligated to make certain deferred payments, not to exceed $6 million. These payments will be triggered by New York Mercantile Exchange West Texas intermediate crude prices of $18.50/bbl, $19.50/bbl, and $20.50/bbl.

Cross Timbers Chairman and CEO Bob Simpson said the "high-margin production" involved in the acquisition will increase his firm's net daily production by about 30%.

Cross Timers Vice-Chairman and Pres. Steffen Palko said, "The east flank of the reservoir has been under a highly successful waterflood since 1969. Secondary recovery operations on the west flank are very prospective, as a successful pilot waterflood has already been initiated. We intend to implement full-scale waterflood operations on the west flank."

Because Shell will no longer have operations in the area after completion of the deal, and Cross Timbers is starting its operations from scratch, Cross Timber is interviewing local Shell personnel.