Northwest Digest

Posted: Thursday, November 04, 2004

Independents carry oil and gas lease sale

ANCHORAGE - Only one major oil company bid at a recent oil and gas lease sale, and that move was in partnership with an independent company.

Independent Pioneer Natural Resources bid in a 50/50 partnership with Conoco Phillips, the only major oil company bidding at the areawide oil and gas lease sales last week.

The state took in $14.7 million in bonus bids - $5.28 million in the Beaufort Sea sale and $9.45 million in the North Slope sale.

The sales were dominated by Armstrong Alaska, subsidiary of Denver-based Armstrong Oil and Gas, which had $8.3 million in apparent high bids, $510,000 in the Beaufort Sea sale and the rest in the North Slope sale.

Bidding with partner Kerr-McGee in the Beaufort Sea sale accounted for $466,000 of Armstrong's bids.

Ed Kerr, vice president for land and business development for Armstrong Oil and Gas, said the prospects Armstrong is looking for in Alaska are small compared to Prudhoe Bay, but "these are world-class reserves for any company, anywhere."

Kerr said Armstrong believes the North Slope is a place where you can allocate capital and expect to get a return.

"It's very difficult to find somewhere that you can do that," he said. Calgary-based Talisman Energy's U.S. subsidiary Fortuna Exploration was the second-largest bidder at $3.45 million, all for Beaufort leases.

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