Oil Search has signed an agreement to acquire a number of oil assets in the Alaska North Slope from privately-owned companies Armstrong Energy LLC and GMT Exploration Company LLC. The assets include a 25.5% interest in the Pikka Unit and adjacent exploration acreage and a 37.5% interest in the Horseshoe Block. These leases contain approximately 500 million barrel (gross) in the Nanushuk and satellite oil fields, with Nanushuk being one of the largest conventional oil fields discovered in the US in more than 30 years.
The acquisition will provide Oil Search with world class oil assets immediately adjacent to existing infrastructure. The Alaska North Slope is an established, prolific oil producing province, in the world’s largest developed economy, with an attractive fiscal regime. The assets complement the Company’s existing top quartile, high returning PNG gas portfolio and, with significant growth opportunities, have the potential to become, over time, a material business for Oil Search, of a scale equivalent to its PNG assets.
The terms of the acquisition are as follows:
- The purchase of a 25.5% interest in the Pikka Unit and adjacent exploration acreage, 37.5% interest in the Horseshoe Block and 37.5% in the Hue Shale, for US$400 million.
- An option, exercisable at Oil Search’s discretion until 30 June 2019, to purchase all of Armstrong and GMT’s remaining interest in the Pikka Unit and the Horseshoe Block (25.5 % and 37.5% interest respectively) as well as an additional 25.5% interest in the adjacent exploration acreage and 37.5% in the Hue Shale, for US$450 million.
- Oil Search will carry Armstrong and GMT’s share of the 2018/19 appraisal programme (approximately US$25-30 million) if the option is not exercised by 1 June 2018. v Oil Search will assume operatorship on 1 June 2018.
- Oil Search will form a long term partnership with Armstrong, leveraging its technical capabilities and experience in the identification of additional potential growth opportunities in Alaska.
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