Armstrong sells Nanushuk prospect
Despite holding one of the largest North Slope oil prospects, Armstrong Energy is cashing out some of its stake in Alaska.
Oil Search, a publicly traded company based in Papua New Guinea, announced Oct. 31 (Nov. 1 local date) that it has reached a $400 million deal with Armstrong Energy and GMT Exploration Co., a silent partner, to buy into the Pikka Unit and other Slope prospects.
Under the deal, Oil Search will get a 25.5 percent stake in the Pikka Unit — which is operated by Armstrong and holds the 1.2 billion barrel-plus Nanushuk oil prospect — and a 37.5 percent interest in the “Horseshoe” leases to the south.
Armstrong currently operates the Pikka Unit for its partners Denver-based GMT and Spanish major Repsol. Armstrong is also in the midst of the environmental impact statement process to develop the Nanushuk field, which could produce up to 120,000 barrels of oil per day.
Oil Search will take over as operator of Pikka from Armstrong on June 1, 2018, according to a company release. The company also has until June 30, 2019, to buy the rest of Armstrong’s and GMT’s interests in the prospects for another $450 million.
Currently, Repsol holds a 49 percent share of the Pikka Unit, while Armstong has 38.25 percent and GMT Exploration the remaining 12.75 percent interest, according to the Division of Oil and Gas.
Oil Search says it is in the process of setting up a U.S.-based subsidiary to manage its new Alaska holdings.
Repsol and Oil Search are partners in oil and gas projects in Papua New Guinea, according to the press release.
“Oil Search looks forward to being able to apply its extensive experience of operating safely and cost effectively in challenging environments, as well as leverage its skills working with indigenous people, to these assets,” Managing Director Peter Botten said in the release.
Oil Search equated the deal to buying into Nanushuk for about $3.10 per barrel.
The company has a deal with Halliburton to utilize the large service company’s operating expertise in Alaska, Oil Search states.
It expects first oil to flow from the Pikka Unit in 2023.
Elwood Brehmer can be reached at [email protected].