To get anywhere near full value out of this new acquisition, ROYL will have to do some development work. This will be expensive. There is also a possible transportation problem. However, the good news here is that the trans-Alaskan pipeline has been operating at less than one third of its 2.1 million bpd total capacity recently. Plus, ConocoPhillips (COP) was also an active bidder on some leases in the National Petroleum Reserve-Alaska. COP is moving closer to getting a permit to build a bridge and a pipeline that could link leases in the reserve to the North Slope infrastructure and eventually to the trans-Alaskan pipeline. COP was also a high bidder on 34 North Slope tracts.
There will be many big oil companies building the infrastructure. All ROYL will have to do is tap in to the infrastructure of others. Those richer companies will charge fees for this, but those will be fees that ROYL will be able to pay over time out of profits from the oil revenues. If oil prices move higher to the $120-$130 range over the next two years (as many now think they will), it will be that much easier for ROYL to pay such fees out of its profits. There is also the possibility that ROYL will take on a JV partner to help pay for all of this. This may be the quickest way to huge profits for the Royale Energy and for its stockholders.