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

Oil Search has signed an agreement to acquire oil assets in the Alaska North Slope, US, from Armstrong Energy and GMT Exploration Company for $400m.

The proposed acquisition comprises a 25.5% interest in the Pikka Unit and adjacent exploration acreage, as well as a 37.5% interest, each in the Horseshoe Block and the Hue Shale.

The assets, which are said to immediately adjacent to the company’s existing infrastructure, contain around 500 million barrels in the Nanushuk and satellite oil fields.

Through the acquisition, the company intends to make a measured entry into the area, with the potential to grow by pursuing the development of discovered resources.

Oil Search managing director Peter Botten said: “For some time, Oil Search has been seeking to acquire oil interests to complement our PNG gas assets, to create a more balanced portfolio that is less exposed to one single commodity and one country.

“The interests acquired provide a unique opportunity for Oil Search to participate in a world class, high returning, proven oil province that can add material value to the company.

“The option to acquire additional equity allows us to increase our interest once appraisal drilling has taken place, as well as the potential to sell-down to a strategic third party to create further value.”

The company is expected to assume operatorship of the assets in June next year.

In addition, the company has the option to double its equity in these assets by acquiring Armstrong and GMT’s remaining interest for $450m.

Oil Search also reached an agreement with Armstrong Energy to jointly explore and develop other opportunities in the area.

Furthermore, Halliburton has agreed to provide resources and capability to support Oil Search’s technical and operating skills on the ground in Alaska.

Oil Search will receive assistance from Halliburton in the areas of drilling, field appraisal, development and the application of latest technologies.