Miller making plans for Badami after purchase
Miller Energy Resources isn’t quite yet the owner of a majority stake in the small Badami oil field on the North Slope, but the company is already planning new development drilling in the field this winter.
Miller is purchasing 67.5 percent of Badami from Savant Resources, a Denver-based company that has been operating Badami for several years. The remaining interest in the field is held by Arctic Slope Regional Corp.
“We’re mainly waiting in approval of the Badami pipeline purchase by the Regulatory Commission of Alaska, which we expect in late October or early November. That essentially dictates when we close the overall purchase,” said David Hall, CEO of Cook Inlet Energy, Miller’s Alaska operating subsidiary.
Miller is now looking for a drilling rig to develop more production wells and increase production at Badami, Hall said. The field now produces about 1,100 barrels per day, or b/d.
Hall said the Badami purchase also brings Savant’s holdings in the Point Thomson Unit, where ExxonMobil, the operator, is now developing a gas condensate project.
Sourdough, a small undeveloped oil discovery within the unit that is near the border of the Arctic National Wildlife Refuge, is part of the Savant assets being acquired, he said.
In another development, Miller has signed a letter of intent to purchase Cook Inlet assets of bankrupt Buccaneer Energy. The company has made an offer between $40 million and $50 million to the bankruptcy trustee and Buccaneer for the company’s properties, according to a press release from Miller.
Buccaneer’s assets include the small Kenai Loop gas field on the Kenai Peninsula south of Anchorage, which now produces about 10 million cubic feet per day of gas, as well as undeveloped onshore oil and gas leases elsewhere on the peninsula. There is also an option with ConocoPhillips to explore deep oil prospects in the offshore North Cook Inlet field, which produces gas.
“We’re quite excited about the Buccaneer assets. It’s a great fit for us,” Hall said.
The timing of for the bankruptcy sale is uncertain, as is whether the court will accept Miller’s offer, but Hall is optimistic.
“They seem to want to get this done as quickly as possible,” he said.
Miller is in a good position to make an offer, Hall said.
“We’re best suited to take over these properties because of the knowledge we have about them,” Hall said.
Buccaneer now owns about 1.9 million barrels of proven oil equivalent reserves in Cook Inlet.
One complication in the Kenai Loop gas field is a claim by Cook Inlet Region Inc., the Anchorage-based Alaska Native regional corporation for Southcentral, that the gas wells drilled by Buccaneer are draining resources from adjacent lands owned by CIRI.
The Alaska Oil and Gas Conservation Commission, a state regulatory agency, now has a proceeding underway to allocate resources and determine how much CIRI is owed in royalty payments.
Miller now operates the small offshore Redoubt Shoal and onshore West MacArthur River fields on Cook Inlet’s west side and is expanding in Alaska.
Besides the Savant purchase Miller purchased the small North Fork gas field last year from Armstrong Oil and Gas, of Denver. North Fork now produces about 10 million cubic feet per day of gas.
The company is also exploring on the west side of Cook Inlet and recently signed an exploration licensing agreement with the state to explore an area of southwest Cook Inlet.