Stephen Hosmer, co-chief executive of the San Diego-based independent, was addressing an audience at the Alaska Oil & Gas Congress in Anchorage last week when he gave an update on the company’s first test wells drilled on acreage acquired in a state lease sale last year.
Hosmer discussed the early results of the Alcor #1 and Merak #1 well, in which Royale cored portions of the Shublik, HRZ/GRZ, and Kingak shales. The shales are the source rock for Alaska’s Prudhoe Bay oilfield.
Hosmer was sharing the stage with Ed Duncan, chief executive of Great Bear Petroleum, the company against which Royale squared off in a bidding war for the Alaskan shale acreage.
“I can tell you with absolute confidence that where we thought we would find oil in these source rocks, we found oil,” Duncan was quoted as saying, adding that his company plans to accelerate the development phase of their project by as much as a full year.
Hosmer also reaffirmed Royale’s plans to develop about 100,000 acres of land adjacent to Great Bear’s holdings.
The comments were first reported by an industry magazine but were made available in a statement posted on the internet on Thursday.
Royale investors appeared giddy at the news, as the stock soared on the Nasdaq. It rose as high as $5.23 per share in heavy trade, a 61% increase over Wednesday’s $3.25 close. It eventually settled at $4.32.
Last December, Royale took home the biggest prize in the North Slope lease sale, splashing about $2.7 million for almost 100,000 acres in what is considered the prospective trend for liquids-rich shales.
The move was a huge step-out for Royale, which has previously focused on developing gas-prone projects in California, Texas and the Rocky Mountains.
In the same lease sale, privately-held Great Bear paid about $2.9 million for about 45,000 acres.