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Thursday, November 23, 2017
HomeAlaska NewsArmstrong extracting itself from Alaska

Armstrong extracting itself from Alaska

BY ELWOOD BREHMER
ALASKA JOURNAL OF COMMERCE

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.

Hawkins

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. Armstrong has estimated the cost of developing Nanushuk at $5 billion.

“The acquisition, exploration, appraisal and development costs will be fully covered by existing cash, cash flows and dedicated additional financing facilities,” according to the Oil Search release.

Repsol and Oil Search are partners in oil and gas projects in Papua New Guinea, according to the press release.

[Read more at Alaska Journal of Commerce]

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Suzanne Downing had careers in business and journalism before serving as the Director of Faith and Community-based Initiatives for Florida Gov. Jeb Bush and returning to Alaska to serve as speechwriter for Gov. Sean Parnell. Born on the Oregon coast, she moved to Alaska in 1969.

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