Reports of the demise of North American oil and gas exploration have been greatly exaggerated.

In the past two months, first Apache Corp. (NYSE: APA) in the southern Delaware and now Caelus Energy LLC are still hunting, and finding hydrocarbons.

On Oct. 4, Caelus unveiled a 6 billion barrel (Bbbl) discovery in shallow state waters off the North Slope of Alaska.

Caelus CEO Jim Musselman’s headline-grabbing discovery is a trifecta — the third world-class, multibillion-barrel find of his career (the others were in Colombia and Equatorial Guinea).

In an interview with Hart Energy, Musselman said, somewhat tongue-in-cheek, “One must stay busy. I can’t stay still.”

Privately held Caelus holds a 75% working interest in the Alaska discovery, dubbed Smith Bay, which might hold up to 2 Bbbl of recoverable light, highly mobile oil. It could produce up to 200 Mbbl/d from the Brookian Formation. If that estimate pans out, it would be better than ConocoPhillips’ (NYSE: COP) nearby Alpine Field.

The two Smith Bay discovery wells are 150 miles west of the Kuparuk River Unit.

RELATED: Caelus Energy Makes ‘World-Class Discovery’ On North Slope

The discovery would be a long-term boon for the state of Alaska, which relies heavily on oil and gas taxes to balance its budget. The state has struggled due to declining oil production and low oil prices. However, the discovery will take years to bring production up and running.

What comes next? For now, Musselman said he is out of time to prepare for drilling another well this winter, so he’s looking at January 2018 to get back out on the ice, when Caelus proposes to drill a third delineation well. It will be located about 5 or 6 miles north of the first two wells to form a sort of exploration triangle, he said.

The locations are in a great zip code, but Musselman said they will eventually disappear as the ice melts.

The first two wells, about six miles apart, each had about 1,000 ft of section, with 183 ft and 223 ft of net pay. Flow tests weren’t conducted due to time and weather constraints, but Caelus took sidewall cores that were analyzed in a lab. Some 126 square miles of 3-D seismic were shot leading up to the wells.

“These wells were drilled on ice pads and have no permanent wellheads—they are essentially throwaways when the ice melts. This is in an area passed up for years because these are not wonderful reservoirs—but they’re good enough,” he said.

“Good enough” must be a relative term. “It’s quite large. We’re saying there’s 6 Bbbl of oil in place but we think it’s closer to 10 Bbbl, and we think we can recover 2 Bbbl. The good news is, it’s light oil. We still need to shoot seismic on the outboard piece on the northern third of it, and we think the reservoir will actually improve as we move north.”

Musselman said this is a combo play of mostly sandstone reservoirs interbedded with laminated shales. The structure is a turbidite fan that spreads out once passed the shelf, he said. It is not a shale play, but Caelus will need to frack through laminated shales to fully maximize the resource recovery.

“We were hopeful to get back out on the ice this winter, but we ran out of time. The logistics are amazing,” he said. “We used the equivalent of 240 trucks and had to barge the rig up there. For this next well, we’ll have more time, so we’re really going to plan it well and drill horizontally to 1,500 or 2,000 feet, and actually frack it and flow test it.

“The first two wells, we had to build an ice pad. … but we were constrained by time and then the ice melted, and your pad is gone. The first well was in just two feet of water.”

Caelus, which was formed in April 2014 with backing by Apollo Global Management, has been operating in Alaska for some time. It has 40 wells on Oooguruk Island, which it acquired from Pioneer Natural Resources (NYSE: PXD) in 2014 for $300 million.

Musselman said that at about the time Pioneer, after many iterations of fracking “got it right,” the company sold the project to Caelus. At the time, the field produced 5 Mbbl/d; today Caelus has increased production to almost 20 Mbbl/d gross and it has fracked about 20 wells. “We are the king of fracturing on the North Slope,” Musselman said.

The new discoveries are on leases acquired from NordAq Energy Inc., a private company, in June 2015. Musselman recalled attending a NordAq meeting before making the deal. As soon as they said, “This is a Jubilee lookalike,” he said, “You had me at hello.”

That’s because in 2007 the prior company he co-founded, Kosmos Energy Inc., discovered the 1 Bbbl Jubilee Field offshore Ghana, with partners Anadarko Petroleum Corp. (NYSE: APC) and Tullow Oil. It averaged 102,600 bbl/d in 2015. Previously, when Musselman helmed Triton Energy, he discovered the La Ceiba Field offshore Equatorial Guinea in 1999. Triton was later acquired by Hess Corp. (NYSE: HES) for $3.2 billion.

“We are pretty excited up here and we think the state of Alaska is excited, which is very important for them as well,” he said. ”They kind of need some good news right now.”

Leslie Haines can be reached at lhaines@hartenergy.com.