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ExxonMobil says the Muruk-1 well has encountered “high-quality” sandstone similar to the Hides field

ExxonMobil (ticker: XOM) announced a new natural gas find Wednesday off the coast of Papua New Guinea. The Muruk-1 well encountered “high-quality” sandstone reservoirs similar to those at Hides field. The Muruk-1 was drilled to a depth of 10,630 feet 13 miles northwest of the Hides Gas Field, the company said in a press release.

Interest owners in the project are Exxon (42.5%), Oil Search Limited (ticker: OSH, 37.5%) and Barracuda Limited, a subsidiary of Santos Limited (ticker: STO, 20%, subject to regulatory approval), with Oil Search as operator.

“We are excited by the results of the Muruk-1 exploration well, which confirms the presence of hydrocarbons in the same high-quality sandstone reservoirs as the Hides field that underpins the PNG LNG project,” said Steve Greenlee, president of ExxonMobil Exploration Company. “Over the coming months we will work with our co-venturers to better determine the full resource potential.”

ExxonMobil PNG LNG project map offshore Papua New Guinea

Source: PNG LNG

Papua New Guinea will be an important link in Exxon’s business moving forward

During the company’s third quarter conference call, Exxon’s management said that it sees LNG as an important part of its business.

“From our energy outlook we have gas growing about 1.6% and LNG growth just under three times where we are in current LNG capacity,” management said during the call. “As you go forward, our LNG business is a very important part of our portfolio. I don’t have a specific breakdown of our total gas production between pipeline sales and LNG contract sales, but recognize that a large part of our Asian gas coming from Qatar and Papua New Guinea is under long-term contracts and a good part of them are liquids-linked.”

Exxon also announced in September that it would purchase Papua New Guinea competitor InterOil Corporation (IOC) in an all-stock deal valued at $2.5 billion. The deal also included an additional resource payment comprised of $7.07 per IOC share for each Tcfe of gross resource certified in the Elk-Antelope field above 6.2 Tcfe – up to a maximum of 10 Tcfe.

The deal expanded XOM’s resource base in Papua New Guinea, and helped to strengthen its position in the LNG market as a whole. Prior to its acquisition by Exxon, IOC proposed the second LNG facility in the country, which would have made it the Irving, Texas-based company’s competitor in major demand centers across Asia.

Oil Search, Exxon’s partner in the Muruk-1 well, also bid on IOC in 2016, but was beat out by Exxon when InterOil encouraged shareholders to vote in favor of XOM’s bid, calling it a “superior proposal.”

The IOC acquisition included interest in six licenses in Papua New Guinea covering about four million acres.

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