Cluff Natural Resources (CLNR) has found a range of development options for two of the company’s lower risk projects on License P2248 in the Southern North Sea through a scoping study conducted by Xodus Group.
The study had indicated robust economics for a range of development options at the Cadence-Scremerston prospect and the Bassett Bunter Sandstone, with an economic evaluation of highly positive NPV values in various P50 development scenarios for both prospects.
CLNR says that post drill expected monetary value (EMV) following a discovery for Cadence and Basset is at some US$111 million (£86.6 million) and $88.5 million (£69 million), respectively The implied extrapolated un-risked net value for the six identified prospects on P2248 is $895.5 million (£697 million).
“This study has confirmed our long-held conviction that exploring for gas in the Southern North Sea can deliver significant value for shareholders and the UK as a whole. Should exploration wells prove commercial quantities of gas in line with expectations, then the scoping study economics demonstrate that cost effective development options are readily available, a key consideration for any operator or investor looking at the company’s exploration assets,” says Algy Cluff, CLNR chief executive and chairman.
In the scoping study, the economics of each prospect, based on a stand-alone development, were tested against numerous potential exploration outcomes and development scenarios and using a gas price profile based on UK national balancing point gas price futures forecasts (as of 7 March 2017) from 2017 to the end of 2021, with gas prices from 2022 onwards increasing at 2% per annum.
At Cadence-Scremerston, highlights include a modelled stand-alone development options including P90, P50 and P10 resource volumes, low and high CO2 cases, different export routings and varying production well performance outcomes using the nearby Breagh field as the key analogue. Mid-case net value, at a 10% discount, is estimated to be $61 million (£47.6 million) for selected development case. P90 to P10 range is estimated to be $16 million (£12.7 million) to $366 million (£285.8 million), respectively.
At Bassett, modelled development options include P90, P50 and P10 resource volumes, low and high CO2 cases, different export routings and varying production well performance outcomes using the nearby Esmond field as a primary analogue.