Oil Search expands interests in Alaska

Oil Search Ltd. has exercised an option to increase its oil and gas interests in Alaska with a view toward starting 30,000 b/d of early production by 2022 from Nanushuk oil field in the Pikka Unit.

Jun 28th, 2019

Oil Search Ltd., Port Moresby, has exercised an option to increase its oil and gas interests in Alaska with a view toward starting 30,000 b/d of early production by 2022 from Nanushuk oil field in the Pikka Unit (OGJ Online, Jan. 25, 2019).

It is buying remaining interests of 25.5% held by Armstrong Energy LLC, Denver, and 37.5% held by Armstrong affiliate GMT Exploration Co. in the Pikka Unit and Horseshoe area and a further 37.5% interest in the Hue Shale leases to the east and a 25.5% interest in other exploration areas. The deal value is $450 million.

It also plans to realign interests with partner Repsol.

After the transactions, Oil Search will hold 51% interests each in the Pikka Unit and Horseshoe area, a 38.76% interest in other exploration areas, and a 75% interest in the Hue shale area.

Armstrong/GMT Exploration will hold a 24% interest in other exploration areas and a 25% interest in the Hue shale.

And Repsol will hold 49% interests each in the Pikka Unit and Horseshoe area and a 37.24% interest in other exploration areas.

Oil Search plans to divest some of its Alaskan interests in the first half of 2020 before making a final investment decision on Pikka Unit development. It expects to retain about 35% of its core assets.

It completed a two-rig, four-well drilling program in the Pikka Unit during 2018-19 and plans to drill two more wells in 2019-20. The new program will assess upside resource potential of Nanushuk field and of the Horseshoe area south of the Pikka Unit.

It envisions the use of facilities on adjacent leases for early production followed by installation of dedicated facilities to allow production to increase by 120,000 b/d in 2024.        

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