Miller Energy Resources closes on Badami deal
There’s a new operating company in the North Slope oil fields, but also one less.
Tennessee-based independent Miller Energy Resources closed on its acquisition of Savant Alaska LLC and that company’s North Slope holdings Dec. 12, including a 67.5 percent interest in the small Badami oil field 35 miles east of Prudhoe Bay.
That makes Miller Energy Resources the new player on the Slope, as the owner of Savant.
In a letter to employees, Savant president Greg Vigil said Miller and Savant received final approvals on the transaction from state regulatory officials on Dec. 11.
Badami is now producing about 1,000 barrels per day, or b/d, with about 600 b/d of that net to Miller Energy Resources, the company said in a press release.
The remaining 32.5 percent interest in Badami is held by Arctic Slope Regional Corp., an Alaska Native regional development corporation based in Barrow.
Savant’s owners were paid $6.5 million in cash by Miller Energy, the company said.
Miller Energy Resources’ subsidiary Cook Inlet Energy now operates Cook Inlet producing assets including oil production from the small West MacArthur River oil field on the Inlet’s west side and the small North Fork gas on the Kenai Peninsula, on the Inlet’s east side.
The company now has about 3,200 barrels of oil equivalent per day in Cook Inlet net of state royalty.
Badami has been a real hard luck story. It was discovered originally by Conoco years ago, and before the merger that created ConocoPhillips, but only limited work was done on the discovery.
BP purchased it from Conoco and launched an ambitious development program but problems with the producing reservoir limited production and the field never met BP’s expectations.
BP operated the field for several years, shut it down but restarted it on a seasonal basis, and then allowed Savant and ASRC to take it over on a “farm-in” basis.
In an interview Dec. 12, Cook Inlet Energy CEO David Hall said Miller is hoping to bring a drill rig to the Badami field to drill more wells and increase production.
It is now working with its partner, ASRC, on those plans, he said. The purchase includes Sourdough, an undeveloped oil discovery 30 miles further east that is near the Arctic National Wildlife Refuge boundary, and other Savant assets within the Point Thomson Unit.
Miller has long-term plans for Sourdough, according to Hall. BP discovered the deposit several years ago but it was not developed because of the lack of infrastructure in the area. This has changed now that a pipeline has been built to the Point Thomson gas and condensate project, which is now under construction by ExxonMobil and BP.
The pipeline has the capacity to carry 70,000 barrels per day of liquids and Point Thomson will produce only 10,000 barrels per day of condensates, so there is plenty of capacity for new oil in the pipeline. Sourdough’s reserves are estimated at 50 million barrels.
Also, the Point Thomson pipeline owned by ExxonMobil, BP and minority owners at the gas field, extends 20 miles to a connection with the Badami pipeline from that field to Prudhoe Bay.
Miller Energy Resources now owns that as part of the Savant deal, which will enhance the company’s position in developing its resources in the Point Thomson region.
Savant employed about 50 people in the Badami operations and these workers are now Miller Energy Resources employees.
Hall said it wasn’t yet determined if Cook Inlet Energy, the operating company for Cook Inlet, will be the Badami operating entity.
“However, we’ll be providing support to Badami from our south Alaska operations,” of Cook Inlet Energy, Hall said.
Also, the former Savant office in Anchorage will be combined with Cook Inlet Energy’s offices, he said.