Vol. 26, No.37 Week of September 12, 2021
Providing coverage of Alaska and northern Canada's oil and gas industry

Oil patch insider: Eni drops E. North Slope; Feige reports; Oil Search secures RCF

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Kay Cashman

Petroleum News

Eni has surrendered its remaining 42 leases on Alaska’s eastern North Slope; leases that were adjacent to acreage held by Oil Search and Bill Armstrong’s Lagniappe Alaska.

Eni surrendered the leases to the state of Alaska in July, which means a rumor reported in Petroleum News about the company planning an exploration project on its eastern North Slope acreage was false.

When asked why Eni relinquished the leases, the company told Petroleum News: “Eni completed its exploration studies on the area the leases covered and the prospectivity of the area didn’t meet Eni’s economic metrics.”

Still Eni remains active farther west on the North Slope. And even without the company’s involvement, the future of the eastern North Slope looks promising.

A few months ago, Armstrong told Petroleum News that he was very excited about the Lagniappe play.

Armstrong and partner Oil Search “are essentially taking our learnings” from their Pikka, Horseshoe, Mitquq and Stirrup Nanushuk oil discoveries west of the central North Slope to east of Prudhoe Bay.

The Lagniappe play concept “is very similar. Multiple zones, onshore, good gravity oil, reasonably close to infrastructure,” he said.

“The targeted objectives are slightly younger than what we have at Pikka et al but with better reservoir qualities - porosity and permeability - even though they are slightly deeper,” Armstrong said.

There have been very few wells drilled in the Lagniappe area, he continued, “and the few wells that have been drilled were not pursuing the zones that we are. Yet almost all wells had good oil and gas shows. We are using 3D seismic. We know what we are looking for due to our big success to the west.”

Armstrong said Lagniappe and Oil Search “are pursuing stratigraphic traps, which are subtle, but now that we know what they look like, they are identifiable on 3D seismic. Real big targets.”

Plus, all the Lagniappe acreage is on state leases, he noted more than once.

Feige: Strong interest at NAPE

Attendees of Summer NAPE in mid-August showed “a lot of interest” in Alaska oil and gas investment, Corri Feige, commissioner of the Alaska Department of Natural Resources, told Petroleum News in a Sept. 7 email.

“Alaska’s endowment and the recent discovery success rate in the Brookian play type are extremely exciting, and widely recognized as one of the hottest onshore plays out there,” Feige said.

“But we also heard a lot of concerns about lack of funding for ‘arctic’ projects. Capital is currently ‘politically constrained’ - my term - due to the federal administration’s push to thwart hydrocarbon investment and development,” she said.

Feige and Alaska Department of Revenue Commissioner Lucinda Mahoney are “planning some direct face time with banks running this mantra under the guise of ESG - which Alaska has been satisfying for decades. (Even before it was trendy!),” Feige said.

ESG is environmental, social and governance performance.

Oil Search secures $565M RCF

On Sept. 9, Oil Search Ltd. said it has signed documentation for a new US$565 million non-amortizing revolving credit facility to replace the $600 million non-amortizing credit facility that expires in June 2022.

The company refinanced through a banking group made up of banks from Papua New Guinea, Australia, Asia and the United States. The credit facility has an expiration date of Dec. 31, 2026.

Commenting on the new corporate facility, Oil Search Vice President of Treasury Chelsea McGregor said: “We are pleased to see support from both existing and new relationship banks, which signals their recognition that Papua New Guinea continues to be an attractive country to invest in.”

The new facility, he said, “extends the group’s weighted average debt maturity profile, maintains liquidity above US$1 billion and is a key component of Oil Search’s capital management strategy for the next five years.”

A few days earlier, Oil Search and Santos Ltd. extended the due diligence period on their proposed merger for another week until Sept. 13.

The $6.26 billion offer tentatively agreed to consists of Oil Search shareholders receiving 0.6275 new Santos shares for each Oil Search share held.

If the deal goes forward, Santos and Oil Search will become the largest oil and gas company on the ASX and one of the top 20 global oil and gas companies.

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