Valeura's value protected by another gas price increase in Turkey

Valeura has announced that BOTAS, which owns the Turkish natural gas network and imports 82% of Turkey’s gas, has announced a fourth natural gas reference price increase. This increase is 14% (63% compounded so far this year) to around USD5.60-6.00. This increase more than compensates for the recent depreciation in the Turkish Lira by maintaining the gas price in USD broadly unchanged.

On a related note, Valeura has drilled the Yamalik-1 well in the Thrace Basin and production tubing will now be fitted for clean-up and testing.

For the next well, Inanli-1, site construction is progressing with the rig being mobilised in location. Spudding is expected end Q3 2018 targeting 5,000m (800m deeper than Yamalik-1). Inanli-1 is the final earn-in well funded by Equinor, the following two appraisal wells will be funded on a working interest basis.

Once appraisal is complete, development should progress expeditiously given the plentiful gas infrastructure to enable monetisation.

#Inanli #Turkey #Valeura #Yamalik

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EnQuest acquires remaining Magnus stake

EnQuest has exercised its option to acquire the remaining 75% interest in Magnus from BP, together with an increase in the interests of the Sullom Voe Terminal (to 15.1%), Ninian Pipeline System (to 18.0%) and Northern Leg Gas Pipeline (to 41.9%). The transaction will add c.60mmboe of 2P reserves and 10mmboe of 2C resources.

To fund the transaction, EnQuest is looking to raise USD138 million in a 3-for-7 rights issue at 21p/share, which represents a 46% discount to the closing share price of 6 September 2018.

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Spirit Energy farms in to Hurricane's Greater Warwick Area

After many years of trying to find a farm-in partner, Hurricane Energy has finally succeeded in bringing in farminee for its Greater Lancaster/Warwick Area in the West of Shetlands.

Hurricane's tough journey had the company combating a falling oil price environment coupled with industry scepticism around its "fractured basement reservoir" plays. In 2017, it ploughed on alone with the sanction of an Early Production System ("EPS") at the Lancaster field without a partner.

With the improving oil price environment and refreshed North Sea corporate landscape, including the likes of Spirit Energy, Hurricane has finally found a partner for its assets. However Hurricane is not giving away its prize of the Lancaster field, instead Spirit Energy is buying into the yet undrilled and untested Warwick prospect and to be appraised Lincoln discovery.

Spirit Energy has farmed into 50% of Lincoln and 50% of Warwick licences, together the Greater Warwick Area (“GWA”) for a committed carry of USD387 million. This transaction is a major stamp of approval for Hurricane and a major step forward ahead of first oil from Lancaster. It also accelerates appraisal of the overall West of Shetland fractured basement play with significant appraisal drilling brought into 2019/20.

Greater Warwick Area is now envisaged to progress as its own separate development to the Greater Lancaster Area, although utilising the same Aoka Mizu FPSO export facilities and infrastructure.

The spending commitment by Spirit Energy will be spread over a number of phases:

• Phase 1: USD180.6 million carry to drill, log and test three exploration/appraisal wells (2019) including funding the purchase of long lead items and carrying out modifications of the Aoka Mizu
• Phase 2: USD187.5 million carry (Subject to FID following Phase 1) for 75% of costs for tie back of one of the GWA wells to the Aoka Mizu, FPSO modifications, and tying the vessel into the West of Shetland Pipeline (WOSP) system for gas export
• Phase 3 and 4: Hurricane will pay its share of the Phase 3 and 4 programme. Phase 3 includes three appraisal wells (2020) and is expected to provide the required well stock for the first phase of a full field development. Phase 4 comprises the front-end engineering and design necessary for the first phase of a full field development of GWA. Upon commencing this phase operatorship is to transfer to Spirit Energy
• Phase 5: The first phase of a full field development (expected 2021) Spirit Energy will carry between USD150 – 250 million of Hurricane’s costs through the development, dependent on the size of the 2P reserves at FID. Up to 300 mmboe would result in a contingent carry of USD150 million and for each barrel above this level, the contingent carry would increase by $0.50/mmboe, up to a maximum of USD250 million for a development of 500mmboe

#Hurricane #Warwick #Lancaster #Spirit #WOS

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Tolmount sanctioned with first gas by end 2020

Premier Oil, Dana Petroleum and Antin has sanctioned the Tolmount gas field in the UK North Sea which is planned to be onstream towards the end of 2020. This represents major project for the partners with 500bcf of gas and plateau production of 300mmcfpd.

This field will further help steer the fortunes of the two upstream partners. Premier Oil is looking for longer term growth projects having been financially constrained for years under a debt mountain and now that Catcher is onstream. For Dana, the company has been strategically lost with its parent KNOC providing minimal guidance over the years.

In progressing this project, Premier Oil has struck a smart deal. Although not necessarily the cheapest form of financing, Premier Oil has been able to secure a deal which massively limits its capex spend on the development. By bringing in Antin to fund its share of the platform and export pipeline to the Easington terminal, it has halved its capex spend to USD120m which will largely be for drilling. In return, Antin will charge a tariff for use of the platform/pipeline transportation from Premier Oil’s share of revenues.

#Premier #KNOC #Dana #Tolmount #NorthSea #Antin

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Energean bearing fruit in the Eastern Med

Energean has published a new CPR highlighting the conversion of 2C resources into 2P reserves at the Karish and Tanin fields. Net 2P reserves for the fields now stands at 298mmboe with 22tcf gas and 32mmbbl liquids (gross) being upgraded. The company’s net 2P reserves including its Greek fields are now at 349mmboe.

A further 0.2tcf gas and 1mmbbl liquids remain in contingent resources relating to the Karish B reservoir and will be upgraded upon successful well production testing.

Energean is now thinking beyond its flagship development project with the recent award of its exploration acreage offshore Israel (Blocks 12, 21-23 and 31). These are estimated to contain 7.5tcf gas and over 100mmbbl liquids prospective resources. This massively enlarges the company’s exploration portfolio beyond the 1.3tcf Karish North prospect being drilled in early 2019. The company has secured an extension on the drilling rig for further exploration drilling should it have matured targets over the next 12 to 18 months.

#Karish #Tanin # Israel #Energean #EastMed #Greece

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All Tawke on Peshkabir: Is Tawke production declining?

The Tawke PSC encompasses the Tawke and Peshkabir fields. In 2017, operator DNO commenced production at Peshkabir and in 2018, drilled the Peshkabir-4 and -5 wells taking production up to 30-35mbopd.

However, the limited disclosure by DNO means it is difficult to break out the production on the Tawke PSC between the Tawke and Peshkabir fields. Based on various disclosures between DNO and partner Genel, it appears that production at Tawke is declining, masked by an uptick in Peshkabir.

The Tawke PSC has been producing just c.110mbopd. However closer study reveals that Peshkabir production is now compensating on falling production on the main Tawke field, and hence maintaining the c.110mbopd levels across the PSC.

Although more production history is required, there are now concerns of the problems encountered at TaqTaq by Genel where reserves and production were significantly reduced as water started to be produced from the reservoirs.

#Tawke #Peshkabir #TaqTaq #waterbreakthrough #Kurdistan #DNO #Genel

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Total sells Norweigian assets to AkerBP for USD205 million

Total has agreed to sell interests in a portfolio of 11 licences in Norway to AkerBP for a cash consideration of USD205 million. The portfolio includes four discoveries with net recoverable resources of 83mmboe.

The acquisition allows AkerBP to consolidate its position around the Alvheim, NOAKA and Skarv hubs as well as adding exploration acreage near its operated Ula field (AkerBP 80%). Increasing stakes in fields and discoveries and having control of tie-backs will help improve the economics of hubs for AkerBP.

For example two of the discoveries, Trell and Trine, are located near the AkerBP-operated Alvheim field (AkerBP 65% operated interest) and are expected to be produced through the low-cost Alvheim FPSO.

One important part of this transaction is the NOAKA area (North of Alvheim and Krafla Askja) where AkerBP and Equinor are pursuing the development for this complex with FID scheduled for 2020. Resources in NOAKA remain stranded until the partners agree a development concept and export route, but adding acreage and discoveries builds further critical mass on the path to bolstering the case for project sanction. Note that NOAKA is estimated to contain over 500mmboe in resources, but scattered across 15 discoveries hence the complexity of the development. Nevertheless this deal shows further intent by AkerBP to maximise recovery from the area.

Separately the Alve Nord discovery is located north of the AkerBP-operated Skarv field (23.8%) in the Norwegian Sea, and can be produced through the Skarv FPSO as another example of synergy.

The transaction is subject to regulatory approval. The full list of licences being transferred is as follows:

Source: Wood Mackenzie

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