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Summary
- Oil Search Limited (ASX:OSH) reported a 33 per cent increase in Alaskan 2C resources after completing a technical study over Mitquq and Stirrup exploration wells.
- The 2C resource for the North Slope increased by 122.1 million barrels.
- The booking includes an additional 20 million barrels (net) within the Pikka Unit, which is now planned to proceed into FEED in early 2021
Oil Search Limited (ASX:OSH) finally takes a breather on the exchange with the price halting the one week price rally. The stock reached a high of $3.980 yesterday, from where it has now taken a U-turn.
OSH is currently witnessing a session of consolidation for today with the stock trading in a narrow range of 90 cents from $3.710 to $3.800 (as on 19 November 2020 11:00 AM AEDT).
However, the stock is showing a short-term bullish set up with the breakaway and the runaway gap witnessed during the recent trading sessions, and the latest update concerning resources at Alaska seems to be keeping the stock buoyant.
Alaskan Resources Soar by 33 Per Cent
OSH completed a technical study over Mitquq, and Stirrup exploration wells drilled previously during the 2019-2020 winter season in Alaska, and post combining the result of the study with the data from the seismic survey, the company reported a significant increase in Alaskan oil resources.
- As a result of recent studies’ merger with the seismic data, the Company reported an increase of 122.1 million barrels in the net 2C resource for the North Slope, leading to a gross increase of 239.4 million barrels.
- Furthermore, with updated resources, the total 2C resources of the prospect have now reached at 493.6 million barrels net or 967.9 million gross, up by 33 per cent against the estimate at the end of the previous year.
Pikka Development Unimpeded
OSH further reported that the booking includes an additional 20 million barrels (net) within the Pikka Unit, taking the total booked 2C oil resources in the Pikka field to 391.5 million barrels (net) on a 51 per cent interest basis.
The total 2C oil resources in the Pikka field on a 100 per cent basis now stand at 767.6 million (gross).
Apart from upgrading its 2C resources, the Company optimised the Pikka Joint Venture and notified the shareholders that the JV is currently preparing to proceed into FEED in early 2021 (subject to oil prices) with Pikka Phase 1.
The development would be a single drill site with a production capacity of 80,000 barrels of oil per day.
The Final Investment Decision (FID) for the phase 1 development is targeted for late 2021, and the first oil is targeted for 2025.
OSH estimates the including contingencies; the initial project cost would remain below USD 3 billion (gross) with oil production at a breakeven cost of supply below USD 40 a barrel.
Seawater Treatment Plant Permission Secured
In March 2020, the Company applied for approval concerning an STP at Oliktok Point to the USACE, and in November 2020, USACE approved the construction plan. The STP is now anticipated to deliver the water requirements for the Pikka project.
