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Australian major Oil Search puts Alaska oil in its portfolio

The company is spending $400 million in cash to diversify a portfolio that until now focused on natural gas in Papua New Guinea.

By Daniel J. Graeber
Australian major Oil Search puts Alaska oil in its portfolio
Australian energy company Oil Search is spending $400 million to buy into the oil potential in Alaska's North Slope. File photo by Heather Snow/Shutterstock

Nov. 1 (UPI) -- In what was described as its most groundbreaking acquisition, Australian energy company Oil Search Ltd. said it was taking a big step into Alaskan oil.

"We're ready to walk you through one of the most exciting acquisitions we've done," Managing Director Peter Botten said in a conference call with reporters.

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The company said Wednesday it took on oil assets that Botten said were "particularly attractive" for $400 million in a buy that gives Oil Search a way to balance its core portfolio in Papua New Guinea.

The company will take on the role of operator in June 2018, after buying assets in the North Slope from Armstrong Energy LLC and GMT Exploration Co. The Australian company said the North Slope was an attractive buy in a good market with break-even costs low relative to the price of oil.

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One of the largest fields in the United States, Oil Search said there could be as much as 1 billion barrels of resources there.

"Based on current oil price and project development cost forecasts, there is adequate capacity to fund these developments without raising additional equity or impacting our dividend policy," the company stated.

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The U.S. Energy Information Administration reported a four-week moving average for Alaskan oil production at 504,000 barrels per day, a 4.3 percent increase over the same period last year. Last week, Alaska Gov. Bill Walker said a December oil and gas lease sale in the state would be its largest in history and representative of a trend.

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"Alaska's updated oil production forecast shows that production is up," he said in a statement.

Oil Search stressed, however, that its push into Alaska was about diversification and not a move away from Papua New Guinea. The company holds a key stake in Papua New Guinea's liquefied natural gas sector and touted itself as a company with a potential for capital and resource growth.

Oil Search last year acquired a 40 percent stake in two license areas off the coast of Papua New Guinea from a subsidiary of CNOOC Ltd., China's largest producer of offshore crude oil and natural gas, for an undisclosed sum.

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