Due to the challenges of the global pandemic and the current price of oil and gas companies are practicing their own brand of horse trading. Selling off and buying up in key areas appears to be the present blueprint for success. Following in line is Alpha Energy and their agreement to purchase Pure Energy, Inc. assets in Oklahoma’s Rogers Project.
“Our strategy at Alpha is to identify assets that are shallow, have good infrastructure and multiple potential target zones that can be acquired for a competitive price given today’s economic environment,” said John Lepin, chairman and chief financial officer. He further indicated the Cherokee Platform and the northern-central area of Oklahoma possesses lucrative options.
What is a shallow well?
Shallow wells are generally defined as those drilled to a depth of 10,000 feet or less. They can, however, differ depending on the location. Those wells included in Alpha’s purchase range from 900 feet to 1200 feet in depth. Local geography and drilling practices are normally utilized as the basis for counties and states in determining shallow depth.
Alpha Energy’s Rogers Project specifics:
The Project is a target rich environment because of its exceptional production growth capabilities in the following areas:
- Producing existing wells.
- Completing defined margin wells.
- Drilling and completion operations on current leases.
- Leasing and developing new acreage to increase production.
Consisting of developed and undeveloped leases, the Project spans approximately 3,429 acres. Alpha Energy’s purchase will provide the company with 87.5% of the working interest in the area with Premier Gas Company, LLC, the current operator, owning the residual interest. The 126 wells included in the leases are producing or or have the potential to be brought on line. In addition to well production equipment, four salt water injection wells are included in the deal. Lepin added 20.5 miles of 4” gas gathering lines, four miles of 2” salt water gathering lines, two delivery connections for natural gas sales and one LTX-LNG natural gas processing equipment.
Using leverage to to their advantage
Premier filed a mechanic’s lien earlier in the month on July 6th and alleged unpaid invoices. Additionally, the company claimed Alpha’s ownership was 75%. Alpha countered that they have not been presented with any past due invoices. They plan to invoke the stance that their agreements regarding the Project provide them with the ability to remove the current operator and select a replacement. Alpha’s gameplan of success also includes taking advantage of currently existing infrastructure in order to divert those funds to increasing production.
Implementing a two phase strategy
Investing in older equipment will aid in increasing cash flow to complete phase 1. Implementation of phase 2 will include drilling shallow wells so as to test formations from the Bartlesville to the bottom of the Granite Wash. The anticipated result of this strategy will be to increase total production and add reserves.
Legal concerns are fostering a period of limbo
In McGirt vs. Oklahoma, the U.S. Supreme Court ruled on July 9, 2020 that a large sector of eastern Oklahoma land is considered Native American property belonging to the Indian reservations of the Five Civilized Tribes. Congress never dissolved this ownership in the Oklahoma Enabling Act of 1906. Oklahoma’s Project is included in The Supreme Court’s legal decision leaving title to land and leases uncertain. As a result, Alpha plans to monitor any developments regarding the decision.
Nick Vaccaro is a freelance writer and photographer. In addition to providing technical writing services, he is an HSE consultant in the oil and gas industry with eight years of experience. He also contributes to Louisiana Sportsman Magazine and follows and photographs American Kennel Club field and herding trials. Nick has a BA in Photojournalism from Loyola University and resides in the New Orleans area. 210-240-7188 [email protected]