CALGARY, Alberta, May 31 (Reuters) – Husky Energy Inc (HSE.TO) said on Monday that an appraisal well of a South China Sea natural gas discovery could produce up to 70 million cubic feet a day, a prolific volume that could lift the value of its proposed spinoff company.
Husky, majority-owned by Hong Kong magnate Li Ka-shing, said the well at the Liuhua 29-1 discovery on Block 29/26 tested at 55 million cubic feet a day, a volume that was restricted by the equipment.
It could pump 60 million to 70 million cubic feet a day, the Canadian-based company estimated.
“The results from this well demonstrate the quality of the Liuhua reservoir,” John Lau, Husky’s outgoing chief executive, said in a statement.
He said further drilling would be needed to find out more about the reservoir and obtain the data needed to work out how best to develop the field.
Husky is readying a plan to spin off its Asian assets into a separate company before the end of this year. Projects like Liuhua and the huge Liwan gas field in the region are seen as marquee assets for the spinoff.
Lau has said he will run the new company. Asim Ghosh is due to take over as Husky CEO on Tuesday.
The appraisal well, the first to follow Husky’s Liuhua find in January, was drilled to 2,930 meters (9,613 feet) in water depth of 765 meters (2,510 feet).
It is located 43 km (27 miles) northeast of the company’s first big discovery on the block and 20 km (12 miles) northeast of the Liuhua 34-2 field.
Chinese state-owned CNOOC Ltd (0883.HK) has the right to participate in any development projects in the region for up to 51 percent working interest.
Husky shares rose 33 Canadian cents, or 1 percent, to C$26.66 on the Toronto Stock Exchange. Li-controlled companies, such as Hutchison Whampoa Ltd (0013.HK) and Cheung Kong (Holdings) (0001.HK), own 72 percent of Husky. (1=$1.04 Canadian) (Reporting by Jeffrey Jones; editing by Janet Guttsman)