The FINANCIAL -- HOUSTON – ConocoPhillips provided an update on its operating plan for Alaska, focusing on the company’s long history of creating value in the state and an ongoing commitment to invest in low cost of supply opportunities. Over the past few years, the company’s Alaska business has undergone a significant transformation, driven by a more competitive fiscal framework, cost reductions, technological advancements and an exploration renaissance.
An outlook for continued investment and growth from investments in legacy assets and development of exploration success;
Captured net resource of 2.0 billion barrels of oil equivalent (BBOE) of less than $40 per barrel cost of supply resource in legacy assets;
Captured 0.5 – 1.1 BBOE of additional gross discovered resource associated with the exploration program in Alaska since 2016, with 75 percent of the play still undrilled;
Strong realizations driven by premium ANS-priced oil.
The company’s legacy asset base consists of a non-operated interest in the Prudhoe Bay Field, an operated interest in the Kuparuk Field and an operated interest in the Alpine Field/Western North Slope assets. In 2018, the company acquired additional interest in the Alpine Field/Western North Slope assets and announced it has entered into an agreement to acquire additional interest in the Kuparuk Field (which is subject to regulatory and other approvals). On a pro-forma basis including the recent transactions, the company estimates 2018 production from its legacy assets would be approximately 225 thousand barrels of oil equivalent per day (MBOED).
Since 2016, ConocoPhillips has undertaken a significant and successful exploration program in Alaska. Based on the exploration results to date, the company believes it has captured 0.5 – 1.1 BBOE of gross discovered resource, with 75 percent of its prospective exploration acreage still to be drilled. The cost of supply of the new resource is estimated to be less than $40 per barrel. The company has a 100 percent working interest in this resource.
In the Greater Willow Area, the company now estimates its 2016-2018 exploration and appraisal campaign has discovered 400-750 MMBOE of gross resource, with undrilled resource upside. The company believes this resource estimate is sufficient to justify developing the area with a stand-alone hub. Preliminarily, the company estimates first oil can be achieved by 2024-2025 for approximately $2-3 billion spent over the course of four to five years after final investment decision. Once first oil is achieved, the company anticipates ramping quickly to full production. Thereafter, the company estimates that an additional $2-3 billion of cumulative drilling capital will be executed over multiple years to maintain production at this facility. Efforts are underway to analyze and evaluate results from the 2018 appraisal season in order to advance development planning and future appraisal needs.
In addition to exploration in the Greater Willow Area, the 2018 exploration campaign included the drilling, coring and flow testing of the Putu and Stony Hill wells in the Narwhal trend south of Alpine. Additional appraisal is required for both discoveries, but current discovered resource is estimated to be between 100 and 350 MMBOE gross. The company also has a 100 percent working interest in this resource.
The company expects another active exploration and appraisal season in 2019.