Oil Search to acquire oil assets in Alaska North Slope for $400m

Oil Search to acquire oil assets in Alaska North Slope for $400m”

Oil Search has secured an agreement with to acquire oil assets in Alaska from privately-owned companies, Armstrong Energy and GMT Exploration, for $US400 million ($522.4 million).

The assets include a 25.5 per cent interest in the Pikka Unit and adjacent exploration acreage and a 37.5 per cent interest in the Horseshoe Block, the locations of which are illustrated below. Repsol S.A., which holds the balance of the interests in the Pikka Unit, exploration acreage and Horseshoe leases, now estimates the discovered resource to be up to 1.2 billion barrels. Armstrong is also in the midst of the environmental impact statement process to develop the Nanushuk field, which could produce up to 120,000 barrels of oil per day. The company also has until June 30, 2019, to buy the rest of Armstrong's and GMT's interests in the prospects for another $450 million.

Currently, Repsol holds a 49 percent share of the Pikka Unit, while Armstong has 38.25 percent and GMT Exploration the remaining 12.75 percent interest, according to the Division of Oil and Gas.

In what was described as its most groundbreaking acquisition, Australian energy company Oil Search Ltd. said it was taking a big step into Alaskan oil.

Oil Search will fund the acquisition from its existing cash, with current liquidity at about $2 billion, comprising $1.2 billion cash and $850 million of undrawn corporate facilities, and the company says it still has " more than enough" financial capacity to fund both the PNG LNG expansion and the Nanushuk development, all while maintaining its dividend policy.

The company said Wednesday it took on oil assets that Botten said were "particularly attractive" for $400 million in a buy that gives Oil Search a way to balance its core portfolio in Papua New Guinea.

Oil Search stressed, however, that its push into Alaska was about diversification and not a move away from Papua New Guinea.

The company already employs Halliburton's services at its Papua New Guinean assets.

It expects first oil to flow from the Pikka Unit in 2023.

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