NEWS BULLETIN

December 18, 2019 --- Vol. 25, No.56December 2019

Pikka recoverable reserves increase, farmout begins

Oil Search Ltd. got more good news about the Nanushuk project in its Alaska North Slope Pikka unit via an independent assessment by resource specialist Ryder Scott that increased certified gross 2C contingent recoverable oil reserves from 500 million barrels to 728 million barrels, a 46% bump.

According to a Dec. 18 Oil Search material progress report released on the Australian Stock Exchange, the Ryder Scott estimates - 513 million, 728 million and 907 million barrels for 1C, 2C and 3C recoverable oil reserves, respectively - include only oil that will be produced under the present Pikka unit development plan (Nanushuk and Alpine C reservoirs) and exclude "several reservoirs within the unit, field extensions outside the unit and other discovered resources that may be developed."

Potential resources in these other reservoirs and areas are "currently being independently assessed and the results are expected to be released in 2020," Oil Search said.

The Ryder Scott assessment was done as part of Oil Search's FEED, or front-end engineering and design, work.

As expected, Oil Search Ltd. subsidiary Oil Search Alaska has entered the FEED phase of the project, per the Dec. 18 update.

The Oil Search board action on FEED is "contingent on joint venture approval and finalization of several third party agreements expected in early 2020," the company said, referring in part to another anticipated board action - Oil Search's divestment of up to 15% of its 51% interest in the Pikka unit and adjacent exploration leases. This process is expected to be finalized in mid-2020, ahead of the financial investment decision for the development.

Oil Search's 49% partner in the area, Repsol SA, has made no announcement about divesting any of its interest, which is not a surprise, as the Madrid-based major has indicated it wants to increase, not decrease its North Slope assets.

Oil Search's operatorship, however, is likely not in jeopardy due to an APIN agreement it has with Repsol.

Oil Search also said it signed a "landmark" land use agreement for development with Kuukpik Corp., the representative Native corporation and landowner for the village of Nuiqsut, the North Slope community nearest the Pikka project area.

- KAY CASHMAN

See story in Dec. 22 issue, available online Friday, Dec. 20 at www.PetroleumNews.com.

For information on PN's news bulletin service, call 907-522-9469.

PO Box 231651, Anchorage, AK 99523 - 1651


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