EnQuest and Delek Group have signed a non-binding memorandum of understanding (MoU) to farm out 20% interest in the Kraken heavy oil development in the UK North Sea.
The area is located in Blocks 9/2b and 9/2c in License P1575, approximately 350km northeast of the city of Aberdeen. The Kraken field is spread over 42km at a depth of 1300m below sea level, and is expected to hold 147 MMbbl of heavy crude oil, at about 14 API in the 2P probable reserves category.
According EnQuest, production from Kraken is expected to commence in 1H 2017, using a floating production and storage offload (FPSO) with the drilling of 25 wells: 14 for production and 11 for injection.
The deal would be between EnQuest to one of Delek’s subsidiaries. EnQuest confirmed the MoU and is working with towards executing binding transaction documents.
Should the deal be approved, Delek will advance US$20 million to Enquest for a period of up to five years at an annual interest of 3% which may be returned to Delek in the event that its costs are not covered by revenues within five years from the completion date, EnQuest said.
Earlier this year EnQuest increased its stake in Kraken to 70.5% with the acquisition, for nominal consideration, of an additional 10.5% share from First Oil, thereby increasing EnQuest’s net 2P reserves by 13 MMboe. Cairn Energy holds the remaining 29.5% stake.
In March, EnQuest cut $425 million of Kraken’s budget.
Image from EnQuest.
Read more:
Subscribe
