DISCOVERIES/DEVELOPMENTS

FAR Limited submits development plan for Senegal’s SNE field

FAR Limited (15%)—alongside partners Cairn Energy (operator, 40%), Woodside (35%) and Senegal National Oil Co. (10%)—has submitted its Development and Exploitation Plan for SNE field, offshore Senegal. Submitted to the government of Senegal, the plan reportedly outlines details regarding the multi-phase development of the roughly 500-MMbbl field, which is expected to have plateau production of approximately 100,000 bopd. According to the company, the first phase of development will see up to 23 subsea oil production, water injection and gas injections wells tied back to an FPSO. The FPSO will be positioned toward the eastern edge of the 350-km² field, in nearly 2,625 ft of water, according to Cairn. Tender responses for the FPSO and supporting infrastructure reportedly are under evaluation ahead of FEED entry.

Equinor’s Skruis discovery confirms Barents Sea potential

With partners Eni and Petoro, Equinor has announced the completion of the Skruis exploration well, in the Johan Castberg license, in the Barents Sea. The well confirmed a volume between 12 MMbbl and 25 MMbbl of recoverable oil. It reportedly will be considered as a tie-in to Johan Castberg, which is planned for start-up in 2022. “This is an important discovery. It helps to determine the size of the Johan Castberg resource base, which is currently being developed. Securing resources near existing infrastructure is an important part of Equinor’s ambition and strategy on the Norwegian Continental Shelf,” Nick Ashton, Equinor’s senior V.P. of exploration said in a release. “The Skruis discovery confirms the potential in this part of the Barents Sea. Over the past couple of years, we have learned that exploration in the Barents Sea is challenging and takes patience. We still have three Equinor-operated wells, and one partner-operated well, left to drill in the Barents Sea. We also have a good portfolio for the next couple of years. Together with the wells we drilled in 2017, this will help clarify the potential in the remaining part of the Barents Sea.” Image: Jan Arne Wold/Woldcam, Equinor.

Equinor confirms Cape Vulture discovery, in the Norwegian Sea

Alongside partners Eni and Petoro, Equinor has confirmed the 50-MMbbl-to-70-MMbbl Cape Vulture discovery, on Nordland Ridge in the Norwegian Sea. It is situated more than 4 mi northwest of the production vessel on Norne field. The discovery more than doubles the remaining oil reserves to be produced through the field, which was previously expected to shut down in 2014. The productive life of Norne, however, has now been extended to 2036, reportedly generating extensive spin-offs. According to Equinor, appraisal of the Cape Vulture discovery is now complete and partners in the Norne license will work toward its development. The Norne FPSO (pictured) is producing from Norne, Alve, Skuld and Marulk fields, which are believed to contain estimated remaining recoverable oil reserves of about 40 MMbbl, as well as recoverable reserves of approximately 80 MMboe. Drilling of the Cape Vulture exploration well began in December 2016. Likewise, drilling of the appraisal (drilled by the Songa Encourage rig) and sidetrack wells began in July 2017, on PL 128.

MERGERS & ACQUISITIONS

BP completes multi-billion-dollar BHP acquisition, establishes BPX Energy

BP has announced that its $10.5-billion acquisition of BHP’s U.S. unconventional assets is now complete. The oil major reported that the deal will significantly upgrade its U.S. onshore portfolio and help drive long-term growth. Accordingly, it is expected to add about 190,000 boed of production and 4.6 Bboe of discovered resources in the liquids-rich regions of the Permian basin and Eagle Ford shale of Texas, as well as in the Haynesville shale, which extends through East Texas to Louisiana. “By every measure, this is a transformational deal for our Lower 48 business. It is an important step in our strategy of growing value in upstream and a world-class addition to BP’s global portfolio,” Bernard Looney, BP’s upstream chief executive, said in a release. “We look forward now to safely integrating these great assets into our business and are excited about the potential they have for delivering growth well into the next decade.” In conjunction with the acquisition, BP also announced that it will rebrand its Lower 48 business, renaming it BPX Energy. According to the company, the “BP” portion of the new name reflects that it remains wholly owned by BP, while the “X” represents exploration and the company’s commitment to improving its business. BP says the change marks a new era of growth for its onshore business unit, which has operated as a separate entity since 2015. Photo: BHP.

Blackstone Energy Parners to acquire Ulterra Drilling Technologies

Blackstone Energy Partners will acquire a majority interest in Ulterra Drilling Technologies from affiliates of American Securities, LLC. Details regarding the financial terms had not yet been disclosed as this issue went to print, although it is said that the transaction is expected to close by year-end. Ulterra, the industry’s largest independent supplier of PDC drill bits, is also reportedly the fastest-growing manufacturer of PDC bits. Following the transaction, American Securities and some members of management will still retain a minority equity interest in the company. Ulterra CEO John Clunan said, “We are very excited about having Blackstone as a partner, as we enter the next phase of growth. Blackstone’s in-depth knowledge of the energy markets through their upstream and midstream companies will provide valuable insight for Ulterra.”

Encana becomes America’s second-largest shale explorer in $5.5-billion deal

Encana Corp. has announced that it will acquire U.S. shale producer Newfield Exploration in its biggest deal yet. The $5.5-billion all-stock deal will give Encana positions in Oklahoma’s SCOOP/STACK, North Dakota’s Bakken and Utah’s Uinta shale plays. It also will rank the company as the second-largest shale explorer in North America. According to Newfield’s website, the company holds approximately 400,000 net acres in the SCOOP/STACK, about 82,000 net acres in the Williston basin and more than 225,000 net acres in the Uinta basin. The transaction reflects Encana’s plans to reduce its reliance on gas and grow outside of Western Canada, where pipeline constraints continue to pressure crude prices. Additionally, Encana has promised significant investor benefits from the deal.

Chesapeake Energy buys WildHorse Resource Development for $3.9 billion

Chesapeake Energy has announced that it will acquire WildHorse Resource Development for about $3.977 billion, adding operations in the Eagle Ford shale and Austin Chalk formations to its Southeast Texas holdings. According to the WildHorse website, the company boasts one of the largest Eagle Ford acreage positions in the industry, with approximately 404,000 net acres in the highly productive liquids-rich basin. Accordingly, Chesapeake reported that it expects the deal to double its adjusted oil production by 2020, to 125,000-130,000 bopd in 2019 and 160,000-170,000 bpd in 2020. Upon closing, which is anticipated for the first half of 2019, Chesapeake says it will assume WildHorse’s $930 million of net debt, as well.

PRODUCTION

Shell’s Lula Extreme South starts production in Brazil’s Santos basin

Royal Dutch Shell (25%)—alongside partners Petrobras (operator, 65%) and Galp (10%)—has announced the start of production at Lula Extreme South, in the Brazilian Santos basin. The project is producing from the FPSO P-69 (pictured), a standardized vessel capable of processing up to 150,000 bopd and 6 MMcmgd. The vessel reportedly will ramp up production through eight producing and seven injection wells. According to Shell, deepwater projects in Brazil’s pre-salt fields are breaking even under $40/bbl, making it an attractive region for exploration and development plans. Following Lula Extreme South, the company says the FPSO P-67 will be brought online for Lula North. It also reported that plans are progressing with its Libra product sharing agreement, as well as for development drilling at Gato do Mato South field in 2019. Image: Shell.

At a three-year high, OPEC output continues climbing to offset losses elsewhere

OPEC and allies reportedly are in a “produce as much as you can mode,” according to Bloomberg, as the group works to meet demand and replace looming shortages. On Nov. 1, it was reported that OPEC had reached its highest production level since 2016. Increases in Libyan and Saudi output have been cited as the source of the offset, as losses mounted from the impending U.S. sanctions on Iran. According to Bloomberg, OPEC boosted output by 430,000 bpd, to 33.33 MMbpd in October. Libya, despite political turmoil and frequent terrorist attacks, managed to reach its highest level of production since 2013. It reportedly has ramped up output by 170,000 bpd, to 1.22 MMbpd. Likewise, Saudi Arabia has increased its output by 150,000 bpd, to 10.68 MMbpd in October. Bloomberg data revealed that Iranian production was already seen slipping in October, as sanctions neared, declining 10,000 bopd, to 3.42 MMbopd. During an interview in London, IEA Executive Director Fatih Biriol said that Saudi Arabia’s output boost was a “comfort” to the market. He said, “But this shouldn’t mean that the challenges are over. We still see strong oil demand growth, Venezuela’s production continues to be in free-fall, and Iranian exports are declining.”