ASX-listed oil and gas producer Oil Search Ltd. is standing its ground in Kurdistan, but monitoring the security situation closely. The company has prepared contingency plans to evacuate personnel and equipment should battles raging in neighbouring Iraq with radical Islamic State of Iraq and Syria (ISIS) forces spill over the border.

Oil Search was continuing to drill its appraisal well at Taza 2 in southern Kurdistan after ExxonMobil Corp. and Chevron Corp. evacuated non-essential personnel from the region.

Prior to US airstrikes on advancing ISIS forces, the share price of some oil and gas companies operating in Kurdistan took a hammering as ISIS advanced to within 45 km of the Kurdistan capital, Erbil, and hundreds and thousands of refugees fled the forces pouring over the border into Kurdistan.

On the London Stock Exchange, Afren Plc. shares fell as much as 4.5 per cent before recovering, Gulf Keystone Petroleum Ltd. was down 6.2 per cent at one stage and Oryx Petroleum Corp Ltd. saw its stock fall as much as 11.0 per cent as investor concerns over Kurdistan rose.

At the height of tensions on Aug. 8, Oil Search, a star performed on the ASX, shed 1.18 per cent from $9.32 to $9.21, but subsequently recovered and closed at $9.33 on Aug. 11.

Ann Diamant, Oil Search’s group manager for investor relations, told Oil and Gas Investor Australia that drilling was continuing at Taza 2 and plans remained on track for another appraisal well, Taza 3, to be drilled toward the end of the month. A 512-sq km seismic program for the Taza exploration block was also unaffected in Kurdistan.

“It is a fairly fluid situation, but a lot of the operations to the north of the country have left or stopped activities, having had operations or drilling occurring close to what was happening with ISIS,” Diamant said.

“We are located in the south and there is a lot less happening down there. It’s relatively stable and obviously our operations are still going on uninterrupted. We have taken a number of precautionary steps and demobilized non-essential personnel back to Dubai, or home.

“We are monitoring the situation on an ongoing basis and we have a good intelligence network working with government and security forces,” she said. “So we’re keeping a close eye on developments and have a range of contingency plans ready and waiting to execute should we need to suspend operations and move our people out. To date that has not proven necessary. Our people on the ground are comfortable and there is no immediate threat.”

Oil Search reported last week that the Taza 2 well had reached a total depth of 4,200m as blowout preventer tests were successfully carried out and hole stabilization operations conducted to treat mud losses encountered during the week.

The company said once the well was stable, the hole would be enlarged prior to installing a 5-inch liner and undertaking a comprehensive testing program. Taza 2 is 10 km northwest of Taza 1 and is designed to appraise hydrocarbon-bearing intervals discovered by Taza 1 in the Jeribe/Dhiban and Euphrates/Kirkuk formations), as well as exploring deeper tertiary and cretaceous targets including the Shiranish Formation.

The participants in Taza 2 are: Oil Search (Iraq) 60%, Total E&P Kurdistan Region of Iraq (Taza) B.V. 20%, Kurdistan Regional Government (KRG) 20%.

Dale Granger can be reached at dgranger@hartenergy.com.

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