Home to multiple multi-billion barrel oil discoveries, including the 25 billon barrel Prudhoe Bay, US$250 million is being ploughed into the North Slope of Alaska for exploration drilling this year, led by ConocoPhillips (NYSE:COP) who is drilling eight wells.
ASX oil junior, XCD Energy (ASX:XCD) — a new arrival on the North Slope, has a 100% working interest in one of the world’s newest, highly prospective onshore oil plays.
Located on the highly prospective Nanushuk trend on the North Slope, XCD’s 100%-owned Peregrine Project is directly adjacent to ConocoPhillips’ large acreage position at its Willow discovery — a US$5 billion 450–800 MMBOE project with potential for 100,000 barrels of oil daily when it commences production in 2024-2025.
XCD lease position relative to ConocoPhillips Harpoon Prospect and Willow Oil Field
Maiden Independent Prospective Resource of 1.6 billion barrels
XCD Energy has just announced the outcomes from the maiden Independent Prospective Resources Report that was recently completed by ERC Equipoise Pte Ltd (ERCE) for its Peregrine Project. ERCE assessed a mean unrisked recoverable oil prospective resource of 1.615 billion barrels of oil net entitlement (after royalties) for Peregrine.
The company’s 1.6 billion barrel prospective resource is associated with three prospects – Merlin (Nanushuk formation), Harrier (Nanushuk formation), and Harrier Deep (Torok formation) at Project Peregrine:
ERCE is the largest global independently owned petroleum reserves and resources auditor, providing expert consultancy services to the upstream oil and gas industry for over 40 years.
The data used to compile the independent prospective resource report includes reprocessed 2D seismic data, basin modelling, petrophysical analysis of publicly available wells and historical geological records.
Both the Harrier and Merlin Prospect at Peregrine are targeting the shallow Nanushuk play at around 4,300ft and 3,400ft, respectively, and can potentially be drilled using a smaller drilling rig, something that XCD is assessing.
The Harrier Deep Prospect would require a standard North Slope drill rig to reach the Torok target (~10,000 ft) but would intersect both the shallow Nanushuk and the deeper Torok objectives in the same wellbore.
XCD’s Managing Director, Mr Dougal Ferguson commented on the prospective resource assessment:
“This excellent result is the culmination of a substantial amount of technical work that has been undertaken over the last six months. We are now able to embark on our farm-out campaign with confidence that the size of the prize is significant enough in our lease area to attract large companies.
“With a raft of wells being drilled in both the NPR-A and State lands by other companies over the current Alaskan drilling season, it should be an exciting period for XCD and any success nearby will significantly upgrade our current lease position.”
Successful National Petroleum Reserve-Alaska (NPR-A) Lease Sale
Prior to delivering the maiden prospective resource, XCD Energy rapidly increased its acreage in the region with its leases now covering almost 200,000 acres in the North Slope’s National Petroleum Reserve-Alaska (NPR-A).
Reflecting the heightened interest in the North Slope, in December the US Bureau of Land Management’s Alaska State Office held its most successful annual lease sale since 2006.
The office received US$11.2 million in bids for more than one million acres in the North Slope’s NPR-A — a significant lift in interest from the prior year’s bids of just US$1.5 million.
XCD Energy’s wholly owned subsidiary, Emerald House LLC, was the high bidder on 45,783 acres over the four leases in the sale bringing its total lease-holding to 195,373 acres, while ConocoPhillips and regional exploration pioneer Bill Armstrong’s North Slope Exploration LLC also managed to secure significant tracts.
Farm-out campaign to begin soon
With the prospective resource complete, XCD will turn its focus to initiating a farm-out campaign, where the options available to farm-in partners will be to pursue either the two well low cost shallow Nanushuk drilling initiative or use a standard north slope drilling rig to pursue all the targets in the Harrier and Merlin Prospects.
XCD Energy’s 100% working interest in 195,373 acres over one of the world’s newest, highly prospective onshore oil plays provides significant leverage in securing a partner. The significant size of its prospective resource at 1.6 billion barrels will also draw attention.
The company will then work towards an initial drilling program pencilled in for the next northern winter, in 2021.
The company is still capped at less than A$10 million but given the size of the prospective resource and its plans for the coming year, it may not stay that way for long.
