Oil Search acquires oil assets


OIL Search has acquired interests in world class, tier-one oil assets with material growth potential in the Alaska North Slope.
It is a well-established, prolific oil province with an attractive fiscal regime.
A company statement says the assets complement the company’s high-quality gas assets in Papua New Guinea and balance its gas-dominated portfolio. The acquisition represents a measured entry into an area that has the potential to grow materially through the development of discovered resources.
Its payment of US$400 million (K1.3bil) represents a compelling, low cost entry, made at an attractive time in the commodity cycle.
The purchase price equates to US$3.1 (K10) per barrel, with potential resource upside reducing the cost to US$1.3 (K4.17) per barrel.
This compares very favourably with global acquisition benchmarks.
It says the acquisition, exploration, appraisal and development costs will be fully covered by existing cash, cash flows “and dedicated additional financing facilities, with no impact to our commitment or ability to support LNG expansion in PNG or our present dividend policy”.
Interests include the Nanushuk oil field, one of the United States’ largest conventional oil discoveries in 30 years and one of the largest globally in the last three years.
The acquisition has been made on the basis of a discovered resource of about 500 million barrels.
However, Joint Venture partner estimates are more than one billion barrels, representing material upside.
Further appraisal drilling will take place on the Nanushuk field in early 2018, after which an independent resource audit will be obtained, with potential to add more than 125 million barrels net to Oil Search’s booked resources.

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