WTI (Aug) $69.79 -85c, Brent (Sep) $74.65 -25c, Diff -$4.86 +9c
USNG (Aug) $2.80 +1c, UKNG (Aug) 82.95p -14.3p, TTF (Aug) €34.05 -€4.8

Oil price

With a half day yesterday and a full day off today the USA is giving no leads although internationally oil is trading about $1.35 better as news of the possible deal between Russia and the KSA is assimilated. With figures indicating that Indian refiners used 6% more crude in May showing yet again that the economy there is sill growing fast that 30m b/d call on Opec in H2 may be bigger…

Jersey Oil & Gas

When I said that JOG was moving at full steam ahead only recently I hadn’t realised just how swiftly they and partners NEO Energy were going. Firstly, as announced this morning they have elected to choose an FPSO re-deployment as the preferred GBA development solution, this is not only the lowest cost and lowest full-cycle carbon footprint option but also is a ‘major step forward for the project’ that ticks a number of crucial boxes including the plans for offshore electrification. 

The partners have already identified a ‘high quality FPSO’ and have agreed key commercial terms for its potential acquisition which will form part of the carry arrangements agreed with NEO. Importantly the JV has received a letter of confirmation from the NSTA confirming that they have no objections to the CSR submitted in order to develop the GBA with this solution. 

Alongside the FPSO announcement JOG has also announced that it has secured a three year extension on the Verbier licence which is also great news, the fact that the NSTA is happy to support the phased nature of the GBA development thereby giving the partnership sufficient time to secure a field development plan for the planned tie back of Verbier to the Buchan infrastructure is a super achievement for the team. 

Jersey Oil & Gas has announced that it has finalised the Greater Buchan Area development solution.

Highlights

• Redeployment of a Floating, Production, Storage and Offloading vessel selected as the preferred GBA development solution – lowest cost and lowest full-cycle carbon footprint option
• The North Sea Transition Authority has completed its review of the selected development solution
• Key commercial terms agreed for the potential acquisition of a high-quality FPSO, subject to negotiation and execution of fully termed agreements

GBA Development Solution
JOG and NEO, as the incoming operator of the GBA licences, have determined that the preferred development solution is via the redeployment of an FPSO.  This solution benefits from being both the lowest cost development option and the one that results in the lowest full-cycle carbon footprint of all the potential options evaluated.  This is driven by the ability to re-use existing infrastructure that can be located directly at the Buchan field and, with limited modifications, make the FPSO “electrification-ready” upon its redeployment.  This will enable the vessel to have the potential to be connected to one of the anticipated floating wind power developments that are intended to be located in close proximity to the GBA following the recent Innovation and Targeted Oil & Gas (“INTOG”) licence awards made by Crown Estate Scotland.

The preferred development solution aligns with the NSTA’s obligations to maximise the economic recovery of reserves and assist with achieving the UK government’s net zero target.   The NSTA has issued a letter confirming it has no objections to the Concept Select Report submitted to support the Buchan re-development programme.  

With the GBA development solution now identified, work is progressing on the engineering studies that are required prior to submission of the development plan in 2024.  The Company estimates that the total capital expenditure for the Buchan field re-development, including the cost of acquiring the FPSO, will be in the region of $900 million (gross cost).  This estimate will be assessed and refined with NEO as part of completing the Front End Engineering and Design and contract tendering activities that precede Field Development Plan (“FDP”) finalisation.

Following the recently completed farm-out transaction with NEO, the Company has a 50% working interest in the GBA licences.  Through the expenditure carry arrangements agreed with NEO, JOG will be carried for 12.5% of the Buchan field re-development costs (equivalent to a 1.25 carry ratio).  In line with JOG’s stated strategy to farm-out a further interest in the GBA licences, it is targeted for the Company to ultimately retain a fully carried 20-25% interest in the Buchan re-development.

Further information on the core components of the development programme and execution schedule will be provided as the work progresses.  The Company is also planning to commission an independent reserves evaluation as part of its end of year financial reporting process.

Proposed FPSO Acquisition
In tandem with the specification of the preferred development solution, the GBA partners have agreed the key commercial terms for the proposed acquisition of an existing FPSO.  The proposed acquisition is conditional on the negotiation and execution of relevant transaction agreements, including a sale and purchase agreement.  The acquisition would form part of the carry arrangements agreed between NEO and JOG.

Jersey has also announced that the North Sea Transition Authority has approved an extension to the Second Term of the P2170 “Verbier” licence.

Further to the recently announced extension of the P2498 “Buchan” licence, the Second Term of the P2170 licence has been extended by three years to 29 August 2026.  The extension was requested in order to provide the licensees with the time required to prepare a Field Development Plan for the Verbier discovery, as part of a phased Greater Buchan Area (“GBA”) development plan.  The first phase of the planned GBA work programme involves re-development of the Buchan field, with the start-up of production targeted for 2026.

Andrew Benitz, CEO of Jersey Oil & Gas, commented:
“We are delighted to have finalised the GBA development solution and agreed key commercial terms for securing an FPSO for redeployment on the Buchan field.  This marks a major step forward for the project, not least by providing the GBA partners with a solution that minimises the overall carbon footprint of the project and provides the opportunity to be an early participant in the UK oil and gas industry’s offshore electrification plans.  We look forward to working closely with NEO, as the incoming operator of the GBA licences, on preparing the overall Buchan field re-development plan that is anticipated to be submitted to the NSTA during the first half of 2024.”

Predator Oil & Gas

Predator Oil & Gas Holdings Plc (LSE: PRD), the Jersey based Oil and Gas Company with near-term gas operations focussed on Morocco, is pleased to announce that the MOU-4 well commenced drilling on 29 June 2023 at the start of the Eid holiday in Morocco.

The well is currently setting the 95/8” casing.

Going after the same as in MOU-3, this well will again look at the new opportunities in the Guercif new gas basin that had not been expected before the drilling programme started which is why the potential for additional upside are of considerable interest. 

Longboat Energy

Longboat Energy, an emerging full-cycle E&P company with activities in Norway and Malaysia, is pleased to announce that a new licence group has been formed and an extended work period has been granted in Norwegian licence PL1049, which has been stratigraphically split and renamed PL1049S.

Longboat Energy Norge AS holds 40% in PL1049S where the main objective is to pursue the Tertiary play, which has been proven to be successful in the area including in Longboat’s Kveikje discovery in PL293B, only 12 km to the East.

Two prospects, Jasmine and Sjøkreps, have been mapped in PL1049S. Longboat previously held 25% in PL1049 where it drilled the deep Cambozola prospect in 2022.

Transaction highlights:  

• Longboat Energy Norge AS increases its prospective resources by forming a new joint venture and retaining a 40% interest in PL1049S
• PL1049S contains two prospects in the Tertiary play: Jasmine and Sjøkreps
• The prospects will be de-risked by wells committed to be drilled in the vicinity and processing of the existing high quality seismic data before drilling decisions are taken

The Company holds 40% in PL1049S where a new joint venture has been formed with DNO Norge AS as operator holding 40% and with Petoro holding 20%.

Longboat initially held 25% in PL1049 where the deep Cambozola prospects was drilled in in 2022. The target for further exploration in the licence is the shallower levels and the licence has been stratigraphically split. The new licence group is retaining PL1049S where two prospects have been mapped, Sjøkreps and Jasmine, both targeting Tertiary plays. The area is covered with new modern high quality seismic data and combined with new processing techniques, there is significant potential to de-risk the exploration prospects.

Sjøkreps is a fault-bounded three-way dip closure at Palaeocene level and has preliminary estimated recoverable volumes ranging between 20 to 300 mmboe1) (P90-P10) with the main risk being quality of reservoir.

The Jasmine prospect is an injectite target at Eocene level, which is analogous to the Kveikje discovery, and has recoverable volume range preliminarily estimated between 10 to 30 mmboe2) (P90-P10) with the main risk being reservoir quality.

The work programme consists of seismic studies, potential seismic reprocessing and integration of results from ongoing and near-term wells targeting the same interval in the area, which combined have the potential to significantly improve the Chances of Success ahead of making a drill decision. The drilling decision has to be made by February 2025.

Longboat Norge AS will shortly become a joint venture between Longboat Energy and Japan Petroleum Exploration Co., Ltd (“JAPEX”) on completion of the investment into Longboat Norge by JAPEX announced on 2 May 2023.

Helge Hammer, Chief Executive of Longboat Energy, commented:
“We are pleased to be able to retain PL1049S in an area which has seen considerable exploration success in recent years including our own Kveikje discovery in April last year. It is exciting that with new high quality seismic data together with our substantial in-house expertise, we have a unique opportunity to de-risk exploration opportunities and add new resources in this very prolific part of the Norwegian North Sea.

“We look forward to working with DNO and Petoro to mature the Jasmine and Sjøkreps prospects and build our position in this key area where we already have the Kveikje discovery and will be drilling the Kjøttkake (formerly Lotus) prospect next year.”

A handy splitting of an existing licence in which LBE has already drilled in the Cambozola they now get another bite at two potential cherries further down the line. It adds some useful longer term exploration in the portfolio to an asset base boosted by yesterdays production deal. Rather belatedly Longboat is coming to life…

KeyFacts Energy Industry Directory: Malcy's Blog