XCD Energy eyes Alaskan oil prospects with new strategy
The North Slope of Alaska is home to some of the world’s largest oil and gas companies.
As the new kid on the block at Alaska’s North Slope, freshly rebranded oil explorer XCD Energy (ASX: XCD) hopes rubbing shoulders with some big guns on one of the world’s newest onshore and highly prospective oil plays could pay off.
Formerly Entek Energy under ASX ticker code ETE, the company changed its name and code last week following shareholder approval.
XCD believes its fresh name will allow it to start a new chapter as an agile and active oil explorer in Alaska.
The company previously owned acreage covering the Niobrara formation in Green River, Wyoming but changed its focus at the start of this year when it took over the Alaskan assets of Elixir Petroleum (ASX: EXR) through the acquisition of Elixir’s subsidiary, Emerald House.
Along with the new assets and name, XCD welcomed Elixir’s managing director Dougal Ferguson and appointed him as the company’s new managing director.
Speaking with Small Caps, Mr Ferguson said the name change reflects the “new board, new management group and new assets”.
Now holding a 100% interest in 13 leases covering 149,590 acres over the recently reinvigorated Nanushuk oil trend on the North Slope, XCD is wasting no time in getting its project firmed up with a maiden prospective resource anticipated in the next two months.
The big boys playground
The North Slope of Alaska is home to some of the biggest oil and gas players including BP (LON: BP), ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP).
The super basin hosts recent discoveries in excess of 1 billion barrels of conventional oil and has produced more than 16 billion bbls of oil to-date from several oilfields including North America’s largest at Prudhoe Bay.
While Prudhoe Bay and other large nearby fields such as Kuparuk have been producing since the 1970s and 1980s, the discovery of the Nanushuk oil play by small independent Armstrong Oil & Gas was a game changer for the North Slope.
Between 2013 and 2015, the Denver-based private company took a punt after examining old well data and drilled within the Pika project with Spanish partner Repsol, discovering the billion-barrel-plus oil fairway.
Nanushuk is now being hailed as one of the largest onshore finds in the US in decades and Mr Ferguson said this new trend is the main reason XCD got involved in the area.
“The Nanushuk is a stratigraphic trap that seems to work in a couple of areas,” he said.
“Stratigraphic traps are traditionally very difficult and often don’t work, and while a lot of the old wells [Armstrong examined] are drilled through this oil zone, previous operators didn’t believe a valid trap existed, so they didn’t test it at the time,” Mr Ferguson explained.
ConocoPhillips then followed in Armstrong’s footsteps and made the giant Willow oil discovery in 2017, which is located about 35km north of XCD’s oil leases.
“We’re pretty confident that we’re in the right space,” Mr Ferguson said.
“What I’ve heard on the street in Alaska is that Conoco believe it knows which clinoforms (stratigraphic traps) work in this play across Alaska so the good thing about that is that we’re on one they’ve already discovered oil on and are developing now” he added.
Mr Ferguson said another selling point for the North Slope is its “safe environment” in terms of tenure and a relatively stable political climate, being onshore the US.
Maiden resource
While XCD’s leases are in proximity to some mega finds, there have been no exploration wells drilled within XCD’s leases thus far, but there are regionally significant wells with data available to the company to work with.
During the June quarter, the company completed the reprocessing of about 600km of 2D seismic data originally acquired by the US Geological Survey in the 1970s and 1980s, including seismic lines covering both XCD’s leases and the ConocoPhillips’ Willow field.
The reprocessed data, along with other regional seismic and well data, is currently being integrated into a more detailed study named the Integrated Nanushuk Technical Regional Overview or the ‘INTRO’ project, which is expected to provide a significantly improved understanding of the oil play.
According to XCD, the INTRO project is due to be completed by late September and is expected to lead to the company releasing a maiden independent prospective resource report for the area.
Mr Ferguson said the company has an “internal resource estimate on its primary lead which is nearing completion”, which will then be integrated into an overall maiden prospective resource across all the leads which will be verified by an independent third party before ready for release.
He said the independent prospective resource report is expected to be released “probably late September, but at latest early October”.
“That will lead us into a campaign to shoot seismic, which is really what you need; you want 3D seismic out here to really attract the big guys to come in and that is our goal,” Mr Ferguson added.
He said the company would then be looking at a farm-out campaign “sometime next year”.