North Sea News

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North Sea News

DRILLING ACTIVITY UNITED KINGDOM

At the time of writing there was one exploration well and one appraisal well active in the UK North Sea. A total of five exploration wells completed in 2020. There were no appraisal wells completed in 2020, which is a first for 55 years. In the Northern North Sea, Apache’s 9/19b-28 Gamma exploration well was spudded on 29 July with the Ocean Patriot semi-sub. Following three re-spuds and two sidetracks, drilling was completed on 25 December after 150 days of operations, with the 9/19b-29Z well having been abandoned. Chrysaor has reported that results from the well programme are ‘highly encouraging’, suggesting that both hydrocarbons have been discovered and that at least one of the penetrations reached the target Eocene reservoir. In the Central North Sea, Apache spudded the 22/6c-B4 exploration well on 28 December, using the Ocean Patriot which mobilised from the operator’s 9/19b-29Z Gamma well. The well is targeting the Upper Jurassic Fulmar Formation within the Bacchus South prospect, which is adjacent to the producing Bacchus field and comprises four tilted fault blocks. In the success case, the well will be developed via the current infrastructure that delivers hydrocarbons from Bacchus to the Alpha platform, part of the Apache-operated Forties field hub, c. 6.5 km to the southwest. Operator CNOOC spudded the Glengorm South 22/26d-3 appraisal well with the Prospector 5 jack-up rig on 3 December. The well is targeting the Upper Jurassic intra-Heather Formation J54 Freshney Sandstone Member at a location to the south of the 2019 discovery well and is planned to be tested. The well has an expected duration of 300 days and will be followed by a second appraisal well in block 22/21c which will be drilled once operations on this have completed.

UK ONSHORE

On 11 January, operator Egdon Resources announced a workover rig had arrived at the Wressle field on the 4 January. The workover rig will recomplete and reperforate the Wressle-1 well to enable the Ashover Grit reservoir to be flowed prior to the end of January. The reservoir is expected to produce at a constrained rate of 500 bopd. On 23 November, Union Jack Oil and Reabold announced the West Newton B-1 well in PEDL 183 had reached TD at 2,295m (7,530ft) MD and encountered both the primary Kirkham Abbey and secondary Cadeby Reef Formations. The Kirkham Abbey Formation indicated hydrocarbons from logs, cuttings and mud gas readings. The secondary Cadeby Reef target did not have sufficient reservoir development. An updip sidetrack was drilled to target an area that was expected to have better reservoir quality in the Kirkham Abbey Formation. On 10 December, operator Rathlin and JV partners announced the WNB-1Z appraisal sidetrack had drilled to a TD of 2,114m (6,936ft) and encountered a hydrocarbon column in the Kirkham Abbey Formation. The well was spudded on 4 October by a Drillmec HH 220 drilling rig and was temporarily suspended on 12 December awaiting the arrival of a testing rig.

NORWAY

At the time of writing there were four exploration wells and no appraisal wells active on the NCS. A total of twenty-six exploration and two appraisal wells completed in 2020. In the North Sea, the MOL-operated 2/9-6 S Eidsvoll well was spudded on 8 January 2021 with the Maersk Integrator jack-up. The well is targeting a submarine fan complex within the Upper Jurassic Mandal Formation. The well is prognosed to take 44 days in a dry hole case. The Equinor-operated 31/1-2 S Røver Nord exploration well was spudded on 12 December using the West Hercules semi-submersible. The well is targeting the Middle Jurassic Brent Group with secondary prospectivity in the Lower Jurassic Cook Formation. The well is prognosed to take 42 days in a dry hole case. Equinor spudded the 31/2-22 S Blasto exploration well on 9 December also using the West Hercules semisubmersible. The well is targeting the Upper Jurassic Sognefjord Formation in a tilted fault block downdip of the Troll field. The well was spudded and the top hole completed prior to being temporarily suspended, with the rig moving to the nearby Røver Nord well. Total drilling time is expected to be 32 days in a dry hole case. The Equinor-operated 34/7-37 S 7-Fjell exploration well spudded on 31 October using the Deepsea Atlantic semi-submersible. The well was targeting the Upper Jurassic IntraDraupne sandstones in a stratigraphic trap to the southwest of the Tordis field. The well was completed on 2 December having failed to encounter reservoir in the Draupne Formation. In the Norwegian Sea, the ConocoPhillips-operated 6507/5-10 S Slagugle exploration well completed on 30 December using the Leiv Eiriksson semi-submersible. The well was targeting the Lower Jurassic Åre Formation and the Triassic in a combination trap to the east of the Ærfugl field. The well encountered a large oil column in sandstones of the Åre

Formation and the underlying Triassic “Grey Beds”. Preliminary volumes are estimated at 75 - 200 mmboe, the largest discovery on the NCS of 2020. In the Barents Sea, Lundin spudded the 7219/11-1 Bask exploration well with the West Bollsta semi-submersible on 24 December. The well is targeting Paleocene sands within a large stratigraphic trap with additional deeper targets. The well is prognosed to complete in 50 days if dry. Equinor spudded the 7018/5-1 Spissa well on 3 November using the West Hercules semi-submersible. The well was targeting the Middle Jurassic Stø Formation, encountering two water wet sandstone intervals with weak hydrocarbon shows. The well reached TD in the lower of the sandstone intervals and did not reach the Middle Jurassic Nordmela Formation nor the secondary Lower Jurassic to Upper Triassic Tubåen Formation targets. The well was completed on 27 November and was P&A dry. The Lundin-operated 7221/4-1 Polmak exploration well, delayed from earlier in 2020, spudded on 10 October using the West Bollsta semisubmersible. The well was targeting 400 mmboe in Triassic sandstones within a stratigraphic trap. The well encountered weak shows in Triassic Kobbe Formation sandstones. The secondary Lower Triassic Havert Formation target has no sandstones. The well was P&A dry on 1 December.

DEAL ACTIVITY UNITED KINGDOM

Three new deals were announced since the last report and two previously announced deals completed.

It was announced on 26 November that Jersey Oil and Gas, which held an 88% operated interest in Central North Sea licence P2170, comprising blocks 20/5b and 21/1d and including the 2017 Verbier discovery, has increased its interest to 100% through the acquisition of CIECO V&C (UK) Ltd. The deal has an initial consideration of £150,000 (c. US$200,000) along with two subsequent contingent payments.

On 14 December, Australian independent Ansila Energy announced it had reached an agreement to acquire the remaining 78.4% interest in Hartshead Resources for a consideration of A$250,000 (US$187,000). Following completion of the deal, Hartshead will become the wholly owned subsidiary of Ansila. Hartshead was incorporated in April 2019 and was offered five contiguous Southern North Sea blocks in the 32nd Licensing Round comprising 48/15c, 49/6c, 49/11c, 49/12d and 49/17b. The acreage includes four undeveloped or partially depleted gas accumulations that are part of fields that have previously been developed but have now ceased production comprising Victoria, Viking Wx, Audrey NW and Tethys North which Ansila plans to progress to development.

On 14 December 2020, Oilex announced that it had completed the acquisition of a 100% interest in 30th Round licence P2446, blocks 113/22a and 113/27e, in the East Irish Sea. Oilex will pay £60,000 and issue 42,500,000 shares in Oilex. In the event of a discovery and development, there is a 0.5% overriding royalty consideration from production once CAPEX has been recovered from new cash flow. The deal was first announced on 23 December 2019 and represented Oilex’s entrance to the UKCS. On 17 December, Energean announced it had completed its acquisition of Edison E&P with an effective date of 1 January 2019. The deal includes Edison’s Mediterranean and UK assets but excludes its Algerian and Norwegian subsidiaries. Energean originally agreed a US$750 million deal in July 2019 to acquire Edison in its entirety. However, the company’s core focus is in the Mediterranean, so in October 2019 agreed a deal with Neptune Energy to sell on Edison’s UK and Norway assets for US$250 million. Neptune cancelled this agreement in May 2020 due to the collapse of commodity prices and in June 2020 Energean and Edison revised the terms for the original deal to exclude the Algerian and Norway assets, with the consideration reduced to US$284 million.

On 23 December, it was announced that SSE has agreed terms for the sale of its E&P assets to Viaro Energy. The asset package is predominantly gas, comprising a number of fields across five main hubs including the Total operated Laggan Area in the West of Shetlands and late life assets in the Southern North Sea. The nominal, headline consideration is £120 million (US$156 million), comprising a cash payment of £25 million (US$32.5 million) on deal completion with the remainder funded through a vendor loan of £95 million (US$123.5 million) payable three years from the completion date. A contingent payment of up to £40 million (US$52 million) will be paid if gas prices reach an agreed threshold in H2 2021. In addition, SSE will receive up to £750,000 per bcf (US$975,000) if the West of Shetland Glendronach discovery is successfully developed. SSE will also retain 60% of the decommissioning liabilities, paying for abandonment as

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North Sea News (cont.)

and when required.

UNITED KINGDOM ONSHORE

No new deals have been announced since the Angus acquisition of a 10% stake in PL235 (Brockham) on 21 October.

NORWAY

On 18 December 2020, OKEA reported that it had signed a Sales and Purchase Agreement (SPA) with Repsol to acquire a 40% interest in the Vette discovery. Vette is located in PL972 in the Norwegian North Sea. Repsol currently operates the licence and operatorship will presumably be transferred to OKEA upon completion of the transaction. The deal has an effective date of 1 January 2021. On 30 December 2020, Sval Energi announced its acquisition of Edison Norge AS for a consideration of US$300 million (NOK 2.6 billion) with an effective price of US$13.2/boe. The deal includes 10% in Dvalin and an additional 15% in Nova, with net 2P reserves of 10 mmbbl and 75 bcf (23 mmboe total), with both fields currently under development. The deal follow’s Sval’s acquisition of Cairn Energy’s Norwegian subsidiary, Capricorn Norge, for a consideration of US$100 million (NOK 915 million) in November 2019. On 31 December, Pandion announced it had acquired a 15% interest in PL617 and an additional 2.5% interest in PL820 S from Wintershall DEA under farm-in terms. The effective date of the transaction has been set to 1 January 2021. Licence PL617 contains the MOL-operated 2/9-6 S Eidsvoll exploration well which was spudded on 8 January and is targeting Upper Jurassic turbidites to the west of the Mandal High. Licence PL820 S contains the 2019 - 2020 MOLoperated 25/8-19 S, A Iving - Evra oil and gas discoveries which proved hydrocarbons at several levels including Eocene, Paleocene, Lower Jurassic, Triassic and basement.

Table 1: Current and recent E&A drilling activity in the UK. Source: Westwood Atlas

Table 2: Current and recent E&A drilling activity in Norway. Source: Westwood Atlas

Table 3: Deal activity. Source: Westwood Atlas