Trapoil farms in to "straight forward" gas development projectMonday, February 11th, 2013
The farm in deal was struck yesterday with Perenco UK Ltd, the firm said, adding that the project on block 43/24a in the Sourthern North Sea was a “relatively straight forward” gas development project, which could provide cash flow in the medium term.
Trapoil is committed to securing a rig within six months for an appraisal well and its share of the drilling costs are expected to be around £5 million.
It said the asset would be eligible for use of the US$20mln loan from GE Energy, announced on January 30 this year.
Trapoil will be the operator of the TET area subject to UK government approval, it added.
TET has proven gas with gross recoverable gas resources estimated to be between 35 and 60 billion cubic feet and the firm believes that the proposed drilling of a new appraisal well could potentially recover closer to 60bcf (gross) if all of the main porous gas bearing sands flow at commercial rates.
The existing 43/25-3 discovery well drilled by Arco British Limited flow tested from two of the five potential sands at a total rate of 50 million cubic feet of gas per day.
Elsewhere, the company said operations were due to start shortly on the Scotney exploration prospect, where spudding ahs been delayed due to adverse weather.
Trapoil holds a 12.5% carried interest.
Meanwhile, operations are also expected to begin around the middle of this month on the the Magnolia exploration prospect, where the firm holds a 10% carried interest
Operations on the the Crazy Horse prospect, where it holds a 17% paying interest and 5% carried interest are currently expected to be delayed until next year, it added.
Trap’s chief executive Mark Groves Gidney told investors this morning: “The farm-in to the TET asset enables the group to secure operatorship, subject to DECC’s approval, and therefore exercise greater control over the scheduling of our work programme.
“In addition, this relatively straight forward gas development project, in conjunction with the promising exploration potential in the adjacent acreage, offers the prospect of attractive cash flow for the group in the medium term.
“We look forward to drilling the Scotney and Magnolia exploration wells over the coming months and to a rig being secured by Noreco to drill the Crazy Horse prospect.”