Business/Economy

Just 8 bids in Cook Inlet lease sale

The Alaska Department of Natural Resources' Division of Oil and Gas received just eight bids on seven tracts in its areawide Cook Inlet lease sale held Wednesday in Anchorage. There were no bids on Alaska Peninsula acreage.

Division of Oil and Gas Director Corri Feige said after the sale that the division had to go back to 2009, when oil prices were in the $60 per barrel range, to find a comparable low rate of bidding in a Cook Inlet areawide sale. Feige also said the bids the state received were on highly prospective acreage, with companies apparently targeting development areas.

This year's Cook Inlet sale brought in $749,819.79 in apparent high bids on 23,801 acres, compared to some $80,000 in apparent high bids for four tracts, 5,733 acres, in the 2009 sale.

Aside from the difference in acreage, the 2009 sale had a minimum required bid of $10 an acre; the minimum bid in this year's sale was $25 an acre, which became standard in 2012.

Over the last five years, Cook Inlet lease sales have brought in more than a million dollars a year: $1.72 million in 2010 for 104,629 acres; $8.2 million in 2011 for 449,164 acres; $4.6 million in 2012 for 128,300 acres; $3.1 million in 2013 for 100,322 acres; and $4 million in 2014 for 83,521 acres.

Three bidders

There were three bidders in the sale: AIX Energy LLC, Hilcorp Alaska and Woodstone Resources.

AIX Energy, a Texas-based independent, took over ownership and operation of the Kenai Loop gas field from Buccaneer Energy in a bankruptcy sale last year. AIX held one tract of state oil and gas lease acreage, some 1,049 acres, prior to the Wednesday sale. It also holds Mental Health Trust acreage, from which the Kenai Loop field produces.

AIX acquired two tracts in the vicinity of that field, bidding $37.85 an acre for a tract of some 1,700 acres and $155.51 an acre for a 425-acre tract. The company's bids totaled some $130,395 for about 2,124 acres, an average of $61.39 per acre overall -- 17.4 percent of the high bids in the sale for 9 percent of the acreage. The $155.51 per acre bid was the highest per-acre bid in the sale.

Hilcorp Alaska, Cook Inlet's major oil and gas producer, bid $25.11 an acre for a 2,698-acre tract in the vicinity of the Cannery Loop and Kenai gas fields which it operates, for a total of $67,747. It also picked up a tract on the southern end of the Kenai Peninsula adjacent to a sizeable block of undeveloped acreage that it holds, bidding $37.27 an acre for a 5,648-acre tract, a total of $210,486.05, the most paid for a tract in this sale. The company's total for the sale was $278,232.83 for 8,345.6 acres, 37.11 percent of the apparent high bids for 35.1 percent of the acreage, an average of $33.34 per acre.

Hilcorp, which entered Alaska when it acquired Cook Inlet assets previously operated by Chevron and Marathon in 2011 and 2012, recently acquired assets from BP on the North Slope, so it now operates in both basins, holding some 341,251 acres of state oil and gas leases prior to this sale.

Woodstone Resources, a Houston-based independent, acquired its first interest in Alaska in 2010 with a small royalty share in a transfer of Cook Inlet leases from Stellar Oil and Gas to Buccaneer Alaska. Prior to this sale, the company had 29,281 acres of oil and gas leases in Alaska, some 6,300 acres in Cook Inlet and some 22,954 on the North Slope.

In this sale, Woodstone acquired three tracts, one on the west side, northeast of the Nicolai Creek gas field and west of the Moquawkie gas field, bidding $27.25 an acre for 2,560 acres, $69,760. On the southern Kenai Peninsula, Woodstone was apparent high bidder on two blocks adjacent to a sizeable block of Hilcorp acreage, paying $25.20 per acre for each of the two tracts, one some 5,011 acres and the other 5,760 acres, $126,280 for the smaller tract and $145,152 for the larger. Woodstone had apparent high bids totaling $341,192.22 for 13,331.12 acres, 45.5 percent of the apparent high bids for 56 percent of the acreage, an average of $25.59 per acre.

Overall bidders paid an average of $31.50 an acre in this sale.

This story originally appeared in Petroleum News. It has been republished with permission.

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