Business

Oil Search doubles stake in Alaska leases

Oil Search is exercising a US$450m option to double its interest in a string of Alaskan leases. (AAP)

Oil Search says it is exercising a $US450 million option to double its interest in a string of Alaskan exploration leases.

Oil Search has exercised a $US450 million ($A642 million) option to double its stake in a string of Alaskan exploration leases, while also affirming plans to sell off a portion of its first major venture outside Papua New Guinea.

The ASX-listed oil producer announced on Friday it would increase its interest in the Pikka Unit, Horseshoe Block and other exploration leases in Alaska after they rose in value following positive drilling and testing results.

The option was included in Oil Search's initial $US400 million foray into Alaska's Nanushuk and surrounding oil fields in 2017.

Oil Search said on Friday the purchase will be funded from existing corporate facilities, but it will also borrow $US300 million for extra flexibility until the planned sell-down of another portion of its Alaska interests is executed in mid-2020.

The company added it had entered an agreement with Spanish-based Repsol to align ownership interests across their shared Alaskan assets.

This will result in Oil Search retaining 51 per cent in the Pikka Unit and the Horseshoe Block, while purchasing a 51 per cent interest in the leases Repsol acquired in 2017, which are located immediately east of the Horseshoe area within the prospective Nanushuk trend.

This alignment will result in a net payment of $US64.3 million from Repsol to Oil Search.

Oil Search shares slipped by 0.69 per cent to $A7.15 in the first 10 minutes of trade on Friday and have now edged 0.42 per cent lower in 2019.

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