ConocoPhillips, Oil Search, 88 Energy and XCD Energy highly leveraged to winter exploration on Alaska’s North Slope

Alaska North Slope oil discovery drilling 2020 Nanushuk
The current focus on Alaska’s North Slope is the Nanushuk formation.

With the new year upon us, Alaska’s North Slope is a hub of activity with numerous explorers big and small alike gearing up for drilling programs with the hope of making another big oil discovery on the prolific North Slope.

ConocoPhillips (NYSE: COP), alone, is pumping $6 billion into its North Slope assets in 2020, in what is its largest ever exploration and evaluation program in the region.

The major is drilling four appraisal wells at the Willow Oil Field and three exploration wells at its Harpoon prospect, with both projects on trend and within 35km of another Australian based junior explorer’s ~200,000 acre lease position, XCD Energy (ASX: XCD).

Recently, XCD managed to snap up a further four leases spanning 45,783 acres in the December Nationals Petroleum Reserve – Alaska (NPR-A) oil and gas lease sale.

The leases add to XCD’s existing ~145,000 acres on the North Slope, with the combined leases known as Project Peregrine.

XCD Energy Alaska leases oil North Slope Nanushuk map
XCD Energy’s lease position relative to ConocoPhillips Harpoon Prospect and Willow Oil Field.

The annual December sale was touted the most successful since 2006, with US$11 million (A$16 million) in bids received and North Slope veteran Bill Armstrong acquiring over 1 million acres in the sale.

Speaking with Small Caps, XCD managing director Dougal Ferguson said the company was “very pleased to have secured” additional acreage in a region that is quickly becoming a hot spot for oil and gas explorers, with Armstrong’s recent entry a major endorsement of XCD’s strategy.

XCD’s first independent prospective resource report for its project is due “imminently”.

Mr Ferguson added that following release of the prospective resource numbers, the company would then kick-off its search for a farm-out partner to target exploration drilling next winter season (2021).

As part of this, XCD will have a booth and will be presenting its wares at the upcoming international NAPE Summit, which will be held in Houston, Texas in early February.

Meanwhile, another junior explorer 88 Energy (ASX: 88E) is in advanced planning for its Charlie-1 appraisal well within its Project Icewine, which is now focused on a similar conventional same play type as the other activity in the region.

Charlie-1 is a step out appraisal well to BP Exploration’s (Alaska) Malguk-1, which was drilled in 1991.

88 Energy will be operating Charlie-1 with Premier Oil Plc forking over up to US$23 million towards exploration costs under a recent farm-out agreement.

Majors on the North Slope

In recent years, Alaska’s North Slope has attracted some of the world’s biggest oil and gas majors and super majors including Repsol, Hillcorp, ExxonMobil (NYSE: XOM) and ConocoPhillips.

Discoveries in the area have now exceeded 1 billion barrels of oil, with more than 16Bbbl produced from several oil fields on the slope.

XCD is close to where some of the majors and juniors are exploring including 88 Energy’s upcoming Charlie-1 appraisal well and major player ConocoPhillips’ Willow and Harpoon prospects.

According to XCD, its newly secured leases contain analogous leads to Harpoon, with two of ConocoPhillips’ three wells planned at the prospect within 25km of XCD’s northern lease boundary.

Shoring up the North Slope exploration frenzy was ConocoPhillips previously stating 2020 will be its largest-ever exploration and appraisal program in Alaska.

Another major on the North Slope is Oil Search (ASX: OSH), which is advancing its Pikka Unit development.

Pikka Unit hosts certified gross 1C, 2C and 3C contingent recoverable resources of 513Mbbl, 728Mbbl and 907Mbbl, respectively.

Oil Search is undertaking a winter exploration and construction program at the project, with a final investment decision on development anticipated to occur in the third quarter of 2020.

The major also participated in the recent Alaska lease sale for the North Slope and scooped up a further 39 tracts – consolidating its position on the region.

Nanushuk formation

According to Mr Ferguson, the current exploration focus on the North Slope is the Nanushuk formation, with Bill Armstrong pioneering the initial Nanushuk discovery before selling his holding in the Pikka Unit to Oil Search for US$850 million in 2017.

At the December North Slope lease sale, Mr Armstrong’s company North Slope Exploration LLC dominated the bidding – locking-in 85 tracts covering almost 1 million acres.

“With all the exploration activity on the North Slope in the current season, XCD expects to generate strong interest for its farm-out plans,” Mr Ferguson said.

He added the company would be closely following ConocoPhillips’ exploration activity at Harpoon and appraisal drilling at Willow along with Mr Armstrong’s plans for his recent large acreage acquisition.

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