On 17 January 2019, the large-cap oil player, Oil Search Ltd (ASX: OSH) announced that the Pikka B well in Alaska had encountered hydrocarbons in the Nanushuk formation, in line with pre-drill expectations. During December, the company wrapped up the construction of the Pikka B ice road and well pad followed by the rig (Doyon Arctic Fox) mobilization to the site. The drilling was started on 31 December 2018 which penetrated to the depth of 1,201 metres (3,934 feet) on 10 January. The surface casing was set, and the coring activities are in the process currently.
Oil Search is the world’s leading oil & gas exploration and development company operating country’s key oil producing sites in Papua New Guinea. The company completed the acquisition of stakes in the oil-producing sites at Alaska North Slope, USA.
As stated by Peter Botten, Oil Search’s Managing Director: Significant early drilling results have been demonstrated by Pikka B well exploration. The drilling was started well before the project schedule, and the operations were benefitted by early cold weather. The top Nanushuk basin was encountered slightly high to expectations, and a core has been successfully acquired over a 120 feet interval. Initial analysis of the core highlights hydrocarbon-saturated, high porosity sand. The company aims to procure an additional 330 feet of the core prior to side-tracking the well at the end of this month.
The company has wrapped up the construction of the Pikka C ice road and well pad. The rig (Nabors 105E) mobilization to the site was undertaken on 9 January 2019, with the Pikka C well expected to spud in late January. The objective of Pikka C appraisal is to minimize the uncertain well deliverables.
The evaluation of both the wells will involve four reservoir penetrations. The target is to validate the depth, capacity, and value at the Pikka B and C sites. Well testing is anticipated for March and April, which will be followed by the selection of the well design.
As stated by the company in the Evaluation and Drilling Update of December, the participants at Pikka B well appraisal include 25.5% stakes by Oil Search (Alaska) LLC, 49% by Repsol E&P USA, Inc., 19.1% by Armstrong Energy, LLC and 6.4% by GMT Exploration Company, LLC. The company has earlier stated that the environmental statement for the Pikka sites has been granted by the US Army Corp of Engineers.
Stock performance: The shares of Oil Search are trading at A$7.630, up by 0.395% ( as at 2:19 PM AEST, 17 January 2019). The market capitalization of the company stands at A$11.58 billion with 1.52 billion outstanding shares. With Earnings per share of AUD 0.214, the company is trading at an earnings multiple of 35.450. Over the last six months, the stock has generated a negative return of 16%. However, the shares are up by 9.51% in the new year till date with a performance change of 64.18% over a decade.