XCD Energy ‘encouraged’ by ConocoPhillips’ onshore oil discovery at Alaska’s prolific North Slope

News that ConocoPhillips this week encountered hydrocarbons from the one well it has drilled at its Harpoon exploration prospect within Alaska’s prolific North Slope has been welcomed by neighbouring oil explorer XCD Energy (ASX: XCD).

The discovery is interpreted to be directly on trend and analogous to XCD’s Harrier prospect and located approximately 15km north-west of the company’s Project Peregrine lease position over 790 square kilometres of the National Petroleum Reserve – Alaska (NPR-A).

ConocoPhillips’ announcement follows a successful two-well campaign in Alaska’s Nanushuk sequence drilled recently by Oil Search (ASX: OSH).

Nanushuk is considered one of the world’s most prolific, conventional onshore oil plays.

Exploration within the field in recent years has resulted in a number of major oil finds.

Regional play

Alaska has been labelled as having one of the best exploration prospects in the world, with ConocoPhillips reportedly planning to spend up to $26 billion on new and existing discoveries there over the next decade.

XCD managing director Dougal Ferguson said the Harpoon and Nanushuk results validate the regional play also being pursued by his team.

“It is an excellent exploration result from this season’s drilling campaign that validates our strategy of pursuing the Nanushuk play,” he said.

While ConocoPhillips decided on an early termination of its 2020 winter exploration program to minimise the risks associated with COVID-19, this week’s results were worth the wait.

“Cutting short its North Slope exploration and development program [and then] encountering hydrocarbons in the topsets at Harpoon-2 – which was the only well drilled of three planned – provides us with necessary encouragement to reinitiate our farmout campaign.”

Greater Willow

ConocoPhillips also confirmed it had completed two wells from a planned four to further appraise the wholly-owned and operated greater Willow area, interpreted to be on the same sequence boundary as XCD’s Merlin prospect.

The greater Willow area has a reported resource of between 450 million and 800 million barrels of oil equivalent.

Its development is subject to a final investment decision scheduled for later this year.

Off-market takeover

This week, XCD announced it had been the target of a $7.5 million off-market takeover by 88 Energy (ASX: 88E).

The transaction would create an Alaska-focused company focused on the highly-prospective Project Icewine, Yukon Leases and Project Peregrine.

Discussions are continuing between the two companies and XCD has advised its shareholders to take no action at this point.

88 Energy is an Australian-based oil and gas exploration and appraisal company targeting oil on the North Slope through its flagship Project Icewine, which comprises 480,000 contiguous acres onshore Alaska in oil-rich provinces.

At midday, shares in XCD Energy were steady at $0.008.

Shares in 88 Energy were trading 16.67% lower at $0.005, while shares in Oil Search were also down 6.89% to $2.84.