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Thursday, 30 November 2017 10:36

Kraken production ramps up

EnQuest says its Kraken field is on track to reach 50,000 bo/d gross in the first half of 2018 after achieving month on month production growth since coming on stream June this year.

Armada Kraken FPSO

Early this month, Kraken reached average production rates of around 23,000 bo/d gross, the company reported today (30 November). The field’s second production processing train was brought on stream this month as well, reaching production of more than 40,000 bo/d.

The final drill center (DC) 2 production well also has come online. The company reports seeing excellent drilling performance for its DC3 wells, which are nearing completion ahead of schedule; the process of bringing these wells onstream is underway. EnQuest also says it is making plans to drill DC4 in 2018.

The company completed second and third cargo offloads from Kraken in October and November. The latest cargo sold was contracted for a discount to Brent of less than $5/bbl, EnQuest says in a 30 November operational update.

In August, the company reported that production from the UK North Sea heavy oil field was taking longer to ramp up than anticipated due to commissioning of the floating production storage and offloading vessel’s (FPSO) topsides equipment falling behind schedule. Despite this delay, EnQuest CEO Amjad Bseisu said the company was pleased with Kraken’s reservoir performance and flow rates achieved on individual wells.

The field, located about 125km east of the Shetland Islands off Scotland, started production on 23 June. The $2.5 billion Kraken development will have 25 wells, including 14 production wells and 11 injection wells, that will produce via Bumi Armada’s Armada Kraken FPSO. Wood Mackenzie reported in June that it expected Kraken production to peak at nearly 50,000 b/d in 2019, providing 4.5% of overall UK liquids production for that year.

The four wells from DC1 and three wells from DC2 have produced at initial gross rates above expectations and with stabilized rates that confirm EnQuest’s development plan. All DC1 wells have tested at a maximum rate of about 24,000 boe/d, and stabilized well rates at around 15,000 bo/d. One DC2 well has tested at a rate of over 10,000 bo/d, “demonstrating excellent reservoir properties and completion efficiency,” EnQuest says.

The company says it has been to reduce Kraken’s full cycle gross capital expenditures by 25% from its original sanctioned cost of $3.2 billion, thanks to the success of the DC3 drilling program and lower market rates for the remaining subsea campaign.

EnQuest holds 70.5% interest in Kraken; Cairn Energy is partner with 29.5%.

Read more:

Kraken comes on stream

Kraken commissioning behind schedule

Getting heavy

Hess has shut in production at its Baldpate, Conger and Penn State fields in the deepwater Gulf of Mexico in response to the fire that occurred last week at the Shell-operated Enchilada platform.

The Llano field. Source: Hess

Production is also shut in at the Shell-operated Llano field, in which Hess holds a 50% interest, Hess said in a 13 November press statement. Hess production at these fields is approximately 30,000 boe/d. Hess shut in the fields after Enbridge, which owns the Garden Banks Gas Pipeline system -- to which the Baldpate and Enchilada platforms are connected -- shut in production until further notice due to the fire. 

Shell reported on Sunday (12 November) that it was developing a plan to repair the damaged portions of the Enchilada asset and was redeploying personnel. There is no timeline to resume normal operations, the company said in a statement.

An assessment team on 11 November confirmed isolation of the platform from the 30-inch gas export pipeline and no presence of uncontained hydrocarbons.

Shell and the Bureau of Safety and Environmental Enforcement are investigating the cause of the incident. More than 70 people from Shell and the United States Coast Guard worked together to safely respond to this incident. Throughout the response, Shell said it did not observe any signs of oil on the water associated with this incident.

Read more:

Crews inspect Enchilada platform

[Updated] Enchilada fire injures 2

Thursday, 12 October 2017 14:20

Appomattox hull arrives in US Gulf

The hull for the Appomattox field development facility arrived last week at the Ingleside, Texas shipyard where it will undergo final construction before installation in the deepwater Gulf of Mexico.

Source: Shell

The Appomattox development project is more than 65% complete, and is on track to achieve first oil by the end of the decade, a Shell spokesperson said in a statement to OE.

Appomattox will add approximately 175,000 boe/d (Shell share) when it reaches peak production, with resources of approximately 650 MMbbl from the Appomattox and Vicksburg fields, and potential to increase in the future through near-field discoveries such as Rydberg. 

The platform will tower more than 20 stories above the ocean once fully assembled. It will float in 7400ft of water, span an area larger than two football fields, and will weigh more than the world’s largest naval aircraft carriers, Shell said.

In early August, the hull set sail for the US Gulf from Geoje, South Korea.

“This deepwater development positions Shell for competitive and sustainable growth in the Gulf of Mexico for years to come,” the company said.

Appomattox is one of three field development projects under construction in the deepwater Gulf of Mexico. The other two are Kaikias and Coulomb Phase 2.

Shell has said its deepwater business is a growth priority for the company. By 2020, Shell expects its deepwater production to grow to over 900,000 boe/d from already discovered, established reservoirs.

The company confirmed to OE that it has filed an exploration plan for Garden Banks Block 962 in the Gulf of Mexico, but the exact timing for drilling the Caramel Keg exploration well has yet to be determined.

Read more:

Appomattox hull sets sail for US Gulf

Still in the game

Thursday, 05 October 2017 10:02

Ensco, Atwood shareholders approve merger

Ensco plc announced today (5 October) that Ensco shareholders voted to approve the allotment and issuance of Ensco Class A ordinary shares to shareholders of Atwood Oceanics in connection with the all-stock acquisition of Atwood at the company’s general meeting of shareholders today.

Atwood Oceanics headquarters. Source: Atwood

The final results of the general meeting of shareholders held today indicate that 65% of the shares cast at the meeting voted in favor of this proposal.

 “We are extremely pleased that Ensco shareholders recognized the strategic and financial merits of our combination with Atwood. This transaction is a significant milestone for Ensco as we continue to execute our strategic plan to emerge from the market downturn as the clear leader in the offshore drilling sector, said Carl Trowell, Ensco’s president and chief executive officer, in a 5 October press statement.

“By acquiring Atwood at a pivotal time in the market cycle, we are purchasing high-quality assets at compelling prices as values for the highest-specification assets are at a critical inflection point. Additionally, these high-specification assets will further our ability to meet increasing customer demand and strengthen our competitive position, which coupled with significant expected synergies, will generate meaningful, long-term value for all shareholders,” Trowell commented.

Separately, Atwood announced today that its shareholders voted to adopt the merger agreement with Ensco at a special meeting of Atwood shareholders.  More than 98 percent of votes cast and 70 percent of shares outstanding were voted in favor of the transaction, Atwood reported in a 5 October press statement.

The companies anticipate the closing of the transaction will occur within one business day, assuming all other customary closing conditions are met.

Under the merger agreement, Atwood shareholders will receive 1.60 shares of Ensco for each share of Atwood common stock for a total value of $10.72 per Atwood share based on Ensco’s closing share price of $6.70 on 26 May 2017. Upon close of the transaction, Ensco and Atwood shareholders will own approximately 69% and 31%, respectively, of the outstanding shares of Ensco plc.

Announced in May of this year, the combined company will have a fleet of 63 rigs, comprised of ultra deepwater drillships, versatile deep- and mid-water semisubmersibles and shallow water jackups, along with a diverse customer base of 27 national oil companies, supermajors and independents.

Within the fleet of 26 floating rigs (semisubmersibles and drillships) are 21 ultra-deepwater drilling rigs, capable of drilling in water depths of 7500ft or greater, with an average age of five years – establishing this fleet among the youngest and most capable in the industry, Ensco said in May. The company also will have the largest jackup fleet worldwide of 37 rigs, including 27 premium units.

Evercore ISI analysts believe Ensco is one of the better positioned offshore drillers for a potential market recovery commencing in 2018. The company successfully navigated through the market downturn and is positioning for the recovery by continuing to high-grade its fleet, aligning with select customers in key geographic basins, and preserving liquidity for additional opportunities.

“With the acquisition of Atwood now complete, we expect the company to execute on its integration plans and achieve increased cost synergy targets of $60 million in 2018 and $80 million in 2019 for more than $585 million in present value of future savings after factoring $100 million of transaction costs,” Evercore-ISI analysts said in a 5 October research note.

“Although the company is advancing capex spending and taking on ATW debt, we expect Ensco to continue generating strong cash flow from operations over the next couple of years as the offshore drilling market works through a slow but steady recovery,” the analysts said.

Read more:

Updated: Ensco to takeover Atwood Oceanics

Ensco, Atwood set shareholder vote meetings

Advisory firm recommends Ensco, Atwood merger

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