Oil Search : Successful well tests completed in Alaska

Successful completion of well tests in Alaska

31 March 2020

SYDNEY (ASX: OSH | ADR: OISHY | PNGX: OSH)

Testing of the Nanushuk reservoirs encountered in the Mitquq 1 ST1 and the Stirrup 1 wells has been completed.

Both wells were drilled, logged, cored and flow tested. The flow tests included a clean-up, flow period and a pressure build-up prior to the final flow test to assess well deliverability.

Mitquq 1 ST1, a sidetrack from the Mitquq 1 oil discovery, located nine kilometres east of the proposed central processing facility of the Pikka Unit Development, encountered a net pay zone of 52.5 metres (172 feet) with a gas cap of 9 metres (29 feet). On test, the well flowed at a stabilised rate of 1,730 barrels of oil per day (bopd) from a single stimulated zone.

The Stirrup 1 exploration well, located approximately 12 kilometres west of the 2017 Horseshoe discovery well and 35 kilometres southwest of the proposed Pikka Unit development infrastructure, encountered an oil column with net pay of 23 metres (75 feet). On test, the well flowed at a stabilised rate of 3,520 bopd from a single stimulated zone.

The two Mitquq (Mitquq 1 and Mitquq 1 ST1) and Stirrup 1 oil discoveries, together with the Mitquq 1 ST1 and Stirrup well tests, have provided valuable information regarding the geology and well productivity of the Nanushuk play in the areas to the east and south west of the Pikka Unit. In addition, the discoveries support the potential for material resource growth in the Company's leases.

With testing complete at both well locations, the crews are demobilising and expected to be off-location by mid-April.

Keiran Wulff, Oil Search's Managing Director, said:

"We are very encouraged by the success of our 2019/20 Alaskan exploration programme, with oil discovered in all three penetrations, at Mitquq 1, Mitquq 1 ST1 and Stirrup, and excellent flow rates achieved in the two well tests. We also discovered high quality oil in a deeper reservoir at Mitquq which was not tested. We now have a strong understanding of the geology and potential productivity of the prolific Nanushuk play that underlies our portfolio of leases on the North Slope, which could add substantial resource and value to the Pikka Unit Development.

As previously announced, given current market conditions, Oil Search has decided to delay the Final Investment Decision date for the Pikka Unit Development. The additional time will allow further value engineering and optimisation of the development to take place, with a focus on reducing the break-even of the project, and the integration of the results of the Mitquq and Stirrup wells. While further appraisal will be required, these new discoveries may represent low cost tie-back options to the proposed Pikka Unit Development and have the potential to create substantial long-term value for Oil Search shareholders, as well as having positive implications for the prospectivity of our acreage.

Oil Search Limited

Incorporated in

Papua New Guinea

ARBN 055 079 868

Head office	Sydney office	Mailing address	Tel: [phone]
Port Moresby	1 Bligh Street	GPO Box 2442	Fax: [phone]
Papua New Guinea	Sydney NSW 2000	Sydney NSW 2001	www.oilsearch.com
		Australia

The safe and successful execution of the program has been an excellent demonstration of the expertise and experience of our team in Alaska and has been delivered in close collaboration with our partner contractors and key stakeholders, including the people and organisations of Nuiqsut and neighbouring communities. The rigs used to drill the exploration wells are currently being demobilised. In addition, the winter season early civil works program, which has included the construction of ice and gravel roads, gravel pads and a bridge, is expected to be completed shortly, with all crews, equipment and support infrastructure to be demobilised by the end of April.

The Company is well placed to minimise capital expenditures in Alaska during this challenging time within the oil and gas industry. At present, Oil Search does not plan to pursue an exploration drilling program in the 2020/21 winter season and will focus on maintaining capabilities, advancing work needed to comply with permitting obligations and pursuing opportunities to minimise costs and add value to the Pikka Unit Development. This will enable the Company to respond quickly when oil prices improve. The Company remains committed to progressing the Pikka Unit Development, which will generate material value, jobs, tax, royalty and other revenues for the State of Alaska and regional and local communities, at the appropriate time.

Given the proximity of our acreage to existing infrastructure and the proven prospectivity of the Nanushuk play, we remain very excited about the opportunities for Oil Search in Alaska and are well prepared to deliver the world class Pikka Unit Development when market conditions improve."

Mitquq 1

Stirrup 1

Oil Search Limited

Incorporated in

Papua New Guinea

ARBN 055 079 868

Head office	Sydney office	Mailing address	Tel: [phone]
Port Moresby	1 Bligh Street	GPO Box 2442	Fax: [phone]
Papua New Guinea	Sydney NSW 2000	Sydney NSW 2001	www.oilsearch.com
		Australia

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For more information, please contact:

Investors and International Media:

Ann Diamant

Senior Vice President, Investor Relations

Tel:

[phone]

Mob: [phone]

U.S. Media

Amy Burnett

Manager, U.S. Media & Communications

Tel: [phone]

Mob: [phone]

Investors:

Chris Morbey

Investor Relations Manager

Tel:	[phone]
Mob:	[phone]

This ASX announcement was authorised for release by Oil Search Managing Director, Keiran Wulff.

Oil Search Limited

Incorporated in

Papua New Guinea

ARBN 055 079 868

Head office	Sydney office	Mailing address	Tel: [phone]
Port Moresby	1 Bligh Street	GPO Box 2442	Fax: [phone]
Papua New Guinea	Sydney NSW 2000	Sydney NSW 2001	www.oilsearch.com
		Australia

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