Mexico, Brazil ventures discuss rig sharing

Offshore staff

LONDON – Premier Oil has issued updates on its exploration programs in Latin America.

The company has a 10% interest in blocks 2 and 7 in Mexico’s shallow-water Sureste basin. Existing 3D seismic over the blocks has been reprocessed and the results are expected to be delivered soon, with the data used to confirm final drilling candidates.

Premier expects the first exploration well to spud on block 7 in 2017 and block 2 in 2018. The partners will likely go out to tender for a moored, semisubmersible rig for block 7 during 4Q.

If Premier takes up an option to pay for past costs it could lift its share of both blocks to 25%.

In Brazil’s Ceará basin, a multi-client seismic survey over the company’s acreage was completed earlier this year. Premier has subsequently received fasttrack and final PSTM data and fasttrack PSDM data across its operated CE-M-665 and CE-M-717 concessions and over CE-M-661 (non-operated), and data interpretation is under way.

The final PSDM seismic product should be delivered in 1Q 2017. To date, various promising plays have come to light and the final data will be used to identify drilling targets.

Premier is working with other operators to evaluate rig-sharing options and potentially shared onshore services, along with license extensions to allow for the rig-share negotiations and subsequent wells to be completed prior to license expiry.

In the Foz do Amazonas basin where the company has a 35% interest in block FZA-M- 90, interpretation of new 3D seismic data is under evaluation.

Earlier this year the company appointed four main contractors to assist front-end engineering and design of the Sea Lion Phase 1 project, taking in reserves in the northeast and northwest of the Sea Lion oil field in the North Falkland basin offshore licence PL032.

All parties are collaborating to optimize the facilities design and installation methodology and to cut reduce project costs.

Premier continues to engage drilling and logistics services providers to discuss alternative commercial models being discussed and ways of reducing cost estimates. It expects to issue tender packages for these services by year end.

Current estimate for capex to first oil is now $1.5 billion and the project breakeven price has come down to $45/bbl. Further cost reductions are targeted.

The Falkland Islands government has confirmed an extension to the Sea Lion discovery area license to April 2020. Premier is working with the government to progress a final investment decision, pending acceptable project economics and a successful farm-down process.

08/19/2016

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