2011-03-09-2011-03-08

Formed JV to focus on AK North Slope, with Repsol holding 70% WI in certain blocks held by 70 and GMT covering 2,000 square kilometers.

The American arm of Spanish oil firm Repsol SA, Repsol E&P USA Inc. has formed an exploration joint venture with Denver-based 70 & 148 LLC, an affiliate of privately held Armstrong Oil & Gas Inc., and privately held, Denver-based GMT Exploration LLC on the North Slope of Alaska. Repsol estimates that its total investment will be US$768 million in cash and drilling carries.

Repsol will hold a 70% working interest in certain oil and gas blocks held by 70 and GMT, which are near large producing fields and cover an area of 2,000 square kilometers. Repsol has agreed to carry out the investment necessary to explore and evaluate the economic viability of the resources contained in these blocks. The start of exploratory work is scheduled for next winter.

The North Slope of Alaska is an especially promising area for Repsol as it has already shown to be oil-rich and carries low exploratory risk, the company said in a public statement. The acreage also helps increase the company's presence in OECD countries, it said.

Tudor Pickering and Holt is as advisor to 70 and GMT.

Partners 70 and GMT have been active on the North Slope for the last decade. They are currently two of the largest lease holders in the state with ongoing activities on the North Slope and in the Cook Inlet. Repsol's upstream unit in 2010 posted a record reserve replacement ratio of 131%.