KEYFACT Energy
Rex International Holding Limited announces that the drilling and production testing of well 16/1-28S on the Rolvsnes oil discovery in PL338C, in which Rex’s 90 per cent subsidiary Lime Petroleum AS (“LPA”) holds a 30 per cent interest, has been completed successfully. The operator, Lundin Norway AS, has drilled a 2.5km horizontal section in the reservoir. The drilling results show good reservoir productivity and connection to a significant oil volume, with production rate of up to 7,000 barrels of oil per day (bopd), confirming sustainable commercial oil flow. The next step towards commercialisation is to tie the well to the adjacent producing Edvard Grieg platform which is also operated by Lundin.
Måns Lidgren, CEO of Rex International Holding, said,
“We are very pleased that the results of the well had exceeded expectations and are heartened to be a significant partner in the Rolvsnes discovery, for which Lundin is the operator. Leveraging on our proprietary Rex Virtual Drilling technology, we have built a cluster of investments in the Utsira High core area that are close to existing infrastructure, so that potential commercialisation and return on investment upon discoveries can be fast-tracked. The success in Rolvsnes has de-risked the larger Rolvsnes/Goddo area and validated this value creation strategy. We are confident in the forward commercialisation plan for the Rolvsnes discovery and the potential value increase from drilling of our other exploration assets around Rolvsnes.”
Mr Dan Broström, Executive Chairman of Rex International Holding, said,
“Our strategic repositioning to focus on getting our key assets to production to create value are moving along according to plan. We are now one step closer to achieving a major milestone in generating recurring revenue for the Group, amid more favourable macro-conditions compared to a year ago. While we continue to focus on our activities in Norway and Oman together with professional partners, the Group, being long-term debt free, is in a financially healthy position to bring these plans to fruition. The first value creation goal set by the Company’s management and Board would be to recover to the Company's original IPO value. What we have just announced underpins our opinion given in our communiqué last April that we consider the Company to be undervalued.”
The Rolvsnes discovery is located in the Utsira High area 3km to the south of the oil producing Edvard Grieg platform. The discovery is proven with two earlier wells, with gross recoverable hydrocarbon volumes of up to 90 million barrels of oil equivalent (mmboe). A 10-day production test was carried out, proving a maximum production rate of up to 7,000 barrels oil per day and a sustainable flow rate of nearly 4,500 barrels oil per day. The test results show good reservoir productivity and connection to a significant oil volume that benefits from aquifer pressure support, which are positive factors towards demonstrating commercial recovery at Rolvsnes.
LPA also holds a 20 per cent interest in the adjacent licence PL815, again operated by Lundin, comprising the Goddo prospect which is a geological continuation of the Rolvsnes discovery. The successful Rolvsnes well is considered to have de-risked the prospectivity of the larger Rolvsnes and Goddo area, which Lundin estimates to contain gross prospective recoverable resources of more than 250 mmboe1. The drilling of the Goddo exploration prospect is scheduled to begin in the second half of 2019, following the same design as the Rolvsnes well.
Terje Hagevang, CEO of LPA, said,
“Like the operator Lundin, we are very encouraged that the commercial production rates and oil volumes had exceeded our expectations. Our success in Rolvsnes opens a new play type that could add significant potential for the Norwegian Continental Shelf. We will work with the operator on understanding the full potential of the basement play and plan for the extended production test and further drilling.”