Australian oil and gas companies Carnarvon Petroleum and Advance Energy have completed the Buffalo oil field farm-out agreement as all the necessary conditions have been met.
Carnarvon in December 2020 announced that Advance Energy would acquire 50% of the Buffalo project in the Timor Sea, offshore East Timor, by funding the drilling of the Buffalo-10 well up to US$20m on a free carry basis.
"Advance has met this funding requirement and now has a 50% interest in the project," Carnarvon Petroleum said Tuesday.
"The Buffalo-10 well is on track to be drilled in late 2021, subject to securing a drilling rig, where the tendering process is already underway," Carnarvon added.
Following the well, the joint venture will acquire development funding from third-party lenders and any additional funding requirements (in addition to that provided by third-party lenders) will be provided by Advance as an interest-free loan, the company said.
Carnarvon Managing Director and CEO, Mr Adrian Cook, said: “The completion of this transaction is fantastic news for Carnarvon and Advance Energy and now we look forward to drilling the Buffalo-10 well later this year.
The joint venture will move to develop the field quickly to take advantage of the strengthening oil markets. This will be achieved by suspending the well as a future production well and commencing early development studies during 2021."
"The Buffalo field has the advantage of being in shallow water which enables a low cost project. This together with the certainty of the fields historical production characteristics enables a fast track timetable and makes Buffalo an exciting project for Carnarvon shareholders”.
Carnarvon recently awarded the drilling management services contract to Petrofac, which will include completion of detailed well design, procurement of long-lead items, and contracting the drilling rig and associated services, including the shore base location for the project.
Carnarvon recently said it was targeting the FID for Buffalo in 2022 with the first oil targeted for late 2023.
Carnarvon was awarded the WA-523-P permit, which included the previously developed Buffalo field, in May 2016 for an initial six-year term. The field was discovered by BHP in 1996 and subsequently developed using four wells drilled from a small, unmanned wellhead platform installed in 25 meters water depth, tied back to an FPSO.
Production started in December 1999 at production rates up to approximately 50,000 stb/d and terminated in November 2004 after the production of 20.5 MMstb of highly-undersaturated, light oil (53°API) from the Jurassic-age Elang Formation. All existing facilities and wells were decommissioned and removed prior to Carnarvon being awarded the permit.
Carnarvon initially concentrated its technical work on reprocessing the 3D seismic dataset using full waveform inversion (FWI) technology.
"This work supports the interpretation of a significant attic oil accumulation remaining after the original development, based on sub-optimal positioning of early wells using poorly processed seismic data. Reservoir modeling has been conducted using the latest structural interpretation and available well data, including an extensive history-matching effort to calibrate model/well performance to production rates and water-cut development (governed by strong aquifer drive) observed during the original production period," the company said previously.
According to Carnarvon, independently audited volumetric estimates of contingent resources in the Buffalo oil field are 31.1 million barrels (2C) with low estimates of 15.3 million barrels (1C) and high estimates of 47.8 million barrels (3C).
The Buffalo project was originally located in Australian water, however, the governments of Australia and Timor-Leste signed a deal on maritime boundaries in 2018, that altered the maritime boundary between the two countries affecting the WA-523-P permit containing the Buffalo project. The WA-523-P exploration permit has now been split in two with a portion including the Buffalo oil field changing from its Australian jurisdiction to being exclusively in the East Timor jurisdiction.
According to Advance Energy, Buffalo PSC has the potential to deliver production of 40,000 bopd within three years of the B-10 Appraisal Well depending on the degree of success of the B-10 Appraisal Well.