Acquisition of jack-ups to be converted for Dussafu developments and Q3 production update
BW Energy has concluded on an alternative development plan for the Hibiscus/Ruche satellite field in the Dussafu license offshore Gabon, utilising a converted jack-up rig to reduce investments and time to first oil.
Subsequently, the Company has acquired two jack-up drilling rigs, the 2003-built sister-units “Atla” and “Balder”, from Borr Drilling Ltd. BW Energy will pay a total of USD 14.5 million for the two units.
“A jack-up conversion will enable us to reduce capital investments by about USD 100 million compared to our previous development plan,” said Carl Krogh Arnet, the CEO of BW Energy. “We are benefitting from the availability of high-quality jack-up units at very attractive prices due to the current drilling market slump. By re-using facilities we will also achieve a substantial reduction in field development related CO2 emissions compared to a newbuild platform.”
The seismic reprocessing carried out by BW Energy has indicated the potential for a substantial increase to the Greater Hibiscus oil-in-place volumes, making further developments in the Hibiscus/Ruche area highly likely.
“This development concept offers tangible financial, schedule and environmental benefits. We have consequently decided to secure a second jack-up at a very attractive price to prepare for the future development of the Dussafu license,” said Carl Krogh Arnet. “Acquiring a sister unit will enable us to re-use the engineering and project plans for a second development with obvious synergies.”
Calculations show that redeployment and conversion projects offer 70%-80% reductions to greenhouse-gas emissions compared to new built assets due to reduced steel consumption and shorter yard stays. Further tangible benefits are reduced installation cost as a jack-up can “self-install” after mobilisation to the field and no need for piling into the seabed for stability.
As announced on 16 September, the new development plan is expected to lower the estimated cash-break even oil price for the Hibiscus/Ruche (phase 1 and 2) development to approximately USD 25 per barrel Brent. With the planned increased production from Hibiscus/Ruche, the Dussafu license production cost, including the Tortue field, is expected to drop to approximately USD 11 per barrel. A final decision to restart the Hibiscus/Ruche development is subject to a lifting of COVID-19 restrictions to allow for efficient project execution.
The initial FID approved for the Hibiscus/Ruche development was approved in the fourth quarter of 2019 with an estimated gross development cost of about USD 660 million for both phases and proven resources (2P) of gross 112 million barrels of recoverable oil.
THIRD QUARTER 2020 PRODUCTION UPDATE
Gross production from Tortue averaged 15,449 bbls/day in the third quarter of 2020, amounting to a total gross production of 1,421,329 bbls of oil. BW Energy completed one lifting in the quarter, realising an average price of approximately USD 46 per barrel. Production cost (excluding royalties) was USD 19.6 per barrel. This includes approximately USD 2 million of additional costs related to the COVID-19 pandemic in the quarter.
BW Energy’s share of gross production was 1,044,676 bbls of oil. Net sold volume, which is the basis for revenue recognition in the financial statement, was 548,441 bbls, reflecting an under-lift position of 299,110 bbls at the end of the third quarter.
The company generated a positive cash flow with a cash balance of USD 145 million at 30 September 2020, compared to USD 128 million at 30 June 2020.
For further information, please contact:
Knut R. Sæthre, CFO BW Energy, +47 91 11 78 76
About BW Energy:
BW Energy is a growth E&P company with a differentiated strategy targeting proven offshore oil and gas reservoirs through low risk phased developments. The Company has access to existing FPSOs to reduce time to first oil and cashflow with lower investments than traditional offshore developments. The main assets are 73.5% of the producing Dussafu Marine Permit offshore Gabon and a 95% interest in the Maromba field in Brazil, both operated by the Company. Total net 2P+2C reserves were 247 million barrels at the start of 2020.
This information is subject to the disclosure requirements pursuant to section 5-12 of the Norwegian Securities Trading Act.