Premier Oil 1st Half 2014 Operational Review - Falkland Islands

abarrelfullabarrelfull wrote on 22 Aug 2014 11:13
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Key milestones have been achieved towards the development of the Sea Lion oil field. The functional specification and basis of design for the tension leg platform (TLP) was finalised and the front end engineering design (FEED) contract was awarded in July and is now progressing. Preparations for four well exploration campaign in 2015 are under way and a rig contract was signed in June.

Development
Sea Lion pre-development activities have made good progress following the selection of a phased development scheme involving a TLP at the end of 2013. Based on the latest subsurface studies completed in the first half, recoverable reserves for the Phase 1 of the Sea Lion development are estimated at 308 million barrels (mmbbls). There is an upside of an additional 60 mmbbls if the Chatham well shows that a gas cap is not present in the western side of the field. Phase 2 of development is currently estimated to recover 87 mmbbls of reserves and will be optimised to incorporate any additional exploration success from the Zebedee and Jayne East wells, scheduled to be drilled in 2015.

The functional specification and basis of design for the TLP was finalised during the first half and invitations to tender were issued for FEED. Following evaluation of the proposals from the engineering companies, the TLP FEED contract was awarded in July to Amec who will be responsible for the overall management of the FEED and topsides design. Amec have sub-contracted the work for the hull to Houston Offshore Engineering and the rig design to RDS. The FEED contract for the subsea umbilicals, risers and flowlines (SURF) was awarded in August while the FEED contract for the floating storage and offloading unit (FSO) will be tendered for award in the fourth quarter. A geophysical survey over the planned TLP/FSO location was completed in the first half and a geotechnical survey will be performed later this year for which a vessel has already been mobilised. Both survey results will be incorporated into the FEED process, which is expected to take approximately 12 months to complete.

Market engagement for the engineering, procurement and construction (EPC) of the TLP has commenced with the project team in discussion with global engineering companies and directly with fabrication yards in the Middle East, Asia and the United States. Feedback to date has been positive. In conjunction with this, Premier has been assessing the possibility of securing export credit financing, a competitive source of funds for the project, and initial indications are encouraging.

Given Premier’s current 60 per cent level of equity the group is seeking a suitable partner for the development project.

Exploration
Preparations for the 2015 Falkland Islands exploration and appraisal campaign are well under way. A drilling rig for the campaign has been secured with a rig contract and rig sharing agreement signed in June. All major service contracts have been tendered with bids evaluated and contracts in the process of being awarded. A temporary dock facility, which will support the multi-operator exploration campaign, is currently being installed at Stanley.

The exploration drilling programme is expected to commence in the second quarter of 2015 and will consist of at least four wells targeting multiple stacked fans in licences PL004 and PL032. Options are available for further wells in the event of success. The first two wells in the programme will target the highest impact prospects, Zebedee and Isobel Deep. Zebedee is a low risk step out from the Sea Lion field, while Isobel Deep is designed to de-risk a new fan complex of Sea Lion scale in the south of PL004. The rig is then scheduled to drill two wells for another operator before returning to the North Falkland Basin. The third well will test the Jayne East prospect to the south east of the Sea Lion field, while the fourth well will test the presence of a gas cap on the western flank of Sea Lion and the deeper potential in the Chatham exploration prospect.

In February, the farm-in was completed by Premier and Rockhopper in PL004a and PL004c, which contains the Isobel Deep and Jayne East prospects among others, resulting in Premier’s equity in both licences increasing to 36 per cent.


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