Alaska



ALASKA – WESTERN BLOCKS

Location:                    Onshore North Slope Alaska             
Area:                          92 km2
Otto’s Interest:          22.5% – Great Bear Petroleum Operating (Operator of record)

Otto holds a working interest in four leases totalling over 22,710 acres located in the heart of the prolific Nanushuk oil fairway. The Horseshoe-1 well, which discovered oil in 2017, is located less than one mile to the west of Otto’s Western Blocks. Horseshoe-1 extended the Nanushuk play fairway by well over 20 miles to the south of previous drilling. Repsol reports** that since 2011 the Company has drilled multiple consecutive discoveries on the North Slope along with partner Armstrong.

Industry sources have indicated contingent recoverable resources discovered to date in the trend could contain over 1.2 billion barrels of oil*. This places the trend as one of the most significant emerging plays on the Alaska North Slope. With ongoing drilling in 2018 it is expected that additional discoveries will be made in this emerging play trend.

Western Blocks Prospect

The Horseshoe-1 discovery well was drilled by the Repsol-led joint venture in 2017 to a total depth of 6,000 ft. (1,828 meters) and encountered more than 150 ft. of net oil pay in several reservoir zones in the Nanushuk section. The deviated Horseshoe-1A sidetrack was drilled to a total depth of 8,215 ft. and encountered more than 100 ft. of net oil pay in the Nanushuk interval as well.

Recent in-house technical work conducted by Otto on its Alaska acreage in the Western Blocks has resulted in the identification of an oil prospect with a gross best estimate prospective resource volume of 400 MMbbls and a geological chance of success in the range of 25-30%. The prospective resource calculation was based on a consideration of offset well information (Itkillik River-1 well completion information), seismic expression and a recovery factor of 30%. Otto’s 18.75% net revenue interest (before Great Bear 10% back in – refer table above) in the prospect would be 75 MMbbls.  The prospective resource information was first released to ASX on 25 June 2018.

The prospect, identified on modern 3D seismic data obtained through the Alaska Department of Natural Resources, Division of Oil and Gas is illustrated above in the context of the four graticular leases that comprise the Western Blocks in which Otto holds an interest.

On the abovementioned seismic data the prospect shares many of the positive attributes seen at the Horseshoe-1 discovery* which found light oil reservoired in more than 150ft of net oil sand of the Nanushuk delta sequence.

The discovery at Horseshoe-1 has extended the known accumulation of Nanushuk oil some 20 miles south of earlier discoveries such as those at Qugruk 8 and Qugruk 301 which flowed 30 degree gravity crude at rates as much as 2,160 and 4,600 bbls/d respectively (Repsol press release 2 June 2015).

The Horseshoe-1 discovery has signalled the presence of an extensive previously overlooked hydrocarbon province which is in now attracting major development capital including the recent acquisition by Oil Search of operatorship of the Pikka Unit and a number of oil exploration assets on the Alaska North Slope.

Exploration success in the Nanushuk play-fairway is now being driven by the understanding that when reservoir quality top set sands are present anomalously high amplitudes are seen on seismic data.

This type of positive amplitude response has also been seen on seismic over the Western Blocks as illustrated above. Otto presently calculates a best estimate gross prospective resource of 400 MMbbls in the prospect area mainly on the basis of this amplitude work.

As can be seen some of the block area to the south is not covered by 3D data and as yet uncalculated upside potential is likely to exist in this area as well.

Further encouragement that the prospect will be found oil bearing is provided by the presence of oil shows seen in the adjacent Itkillik River-1 well drilled in 1978 (from publicly available well data at the Alaska DNR). Here oil was observed during drilling at multiple levels within fine grained sediments.

If 3D data had been available at the time Itkillik River-1 had been drilled, the well would likely have been moved further south to intersect a better reservoir quality and more continuous sand interval. This higher quality sand interval is the key target for the proposed Otto well.

Offtake Options

With the Oil Search operated Pikka unit development activities occurring to the west and the Conoco-Phillips Meltwater unit facility some 10 miles to the east, any oil found within the Western Blocks will find a cost effective, commercially attractive route to market. Project economics will be further enhanced by the shallow nature of the oil pool.

Drilling Planning

88 Energy Ltd will manage the drilling of the initial test well in the Western Blocks on behalf of the joint venture and consortium partners. 88 Energy has already commenced a rig market survey and is identifying a suitable rig with which to commence the drilling operations. Given that the location is only accessible through an ice road, drilling will be undertaken during the winter operational months once the Alaska North Slope is opened for operations.

ALASKA - CENTRAL BLOCKS

Ownership: 8%-10.8%, Operator Great Bear Petroleum
Status: Exploration
Location: Onshore North Slope Alaska
Area: 1,163 km2

Through its agreements with Great Bear Petroleum Operating ("Great Bear") in 2015, Otto has between an 8% and 10.8% working interest in 90 leases (covering 287,425 gross acres) held by Great Bear on the Alaskan North Slope (“Central Blocks”).

Great Bear is a private exploration company focused exclusively on exploring and developing conventional and unconventional resources in this highly prospective basin. The leases are in a major play fairway south of the Prudhoe Bay and Kuparuk giant oil fields. 

Great Bear has undertaken significant exploration work on the acreage since 2011 including:

  • Acquisition and processing of approximately 2,970 km2 of 3D seismic data (1,170 km2 in 2016);
  • Drilling of two unconventional stratigraphic test wells which cored three primary unconventional targets; and
  • Drilling of a conventional exploration well (Alkaid-1) which specifically targeted a 3D defined Brookian reservoir. The Alkaid well results are under evaluation.

The extensive, modern 3D seismic coverage, existing well control and proximity to the all-weather Dalton Highway and Trans-Alaskan Pipeline System (TAPS) means the acreage is well positioned for exploration.

Existing 3D seismic has allowed development of an extensive prospect portfolio which includes at least 4 well locations. 

Otto’s exposure on the first two wells is limited to US$2.6m/well.