Calgary-based Husky Energy has expanded its oil and natural gas holdings in the Jeanne d'Arc Basin by acquiring exploration rights on two land parcels covering about 60 square miles (156 square kilometers). The C$36.5 million nine-year work commitment, obtained through a lease from the Canada-Newfoundland Labrador Offshore Petroleum Board, makes Husky one of the largest landholders in the region.
Under the license agreement, Husky will have five years to drill the first well in the new acreage. The company already owns 72.5% of the White Rose oil development in the Jeanne d'Arc Basin, which is about 135 miles east of St. John's, NL and is its operator. White Rose began producing oil two months ago and is expected to reach peak production of 100,000 bbl/d by mid-year.
Husky plans to drill up to four delineation wells in the North Avalon reservoir of the basin this year to further define its oil and gas reserves, and it now is looking for a drill rig to begin the work. The company's White Rose development plan calls for 19 wells; so far, the semi-submersible rig GSF Grand Banks has drilled and completed 10 of those wells.
"Husky Energy now holds two production licenses and other exploration licenses offshore Newfoundland and Labrador, and is evaluating its exploration program with a view towards additional drilling in 2006, subject to the availability of a drilling rig," said CEO John Lau. "With the White Rose oilfield now in production, we believe there is strong potential for development of further oil and gas reserves in the Jeanne d'Arc Basin."
Lau added, "Husky views the existing White Rose infrastructure as a platform for growth, and increasing our land holdings reflects our confidence and long-term commitment to the growth potential of the basin."
In related news, former BP plc executive Robert Peabody will take over in a newly created position of chief operating officer, fueling rumors that longtime CEO Lau will soon step down. Peabody previously led European and U.S. businesses for BP, and he will take over all of Husky's Canadian operating units, the company said.
"The addition of Mr. Peabody to our management team strengthens our focus on growing production, controlling costs and increasing reserves," Lau said in a release. The company, which is controlled by Hong Kong billionaire Li Ka-shing, also has production and exploration businesses in the South China Sea.
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