(Sharecast News) - Energy investment company Advance Energy updated the market on drilling plans at Buffalo-10 on Tuesday, confirming that Carnarvon Petroleum was expecting to drill in the fourth quarter.
The AIM-traded firm said its payment of $20m (£14.16m) to acquire a 50% interest in the Buffalo production sharing contract (PSC) would be used for the drilling of Buffalo-10.
It said the procurement of long lead equipment had started and was progressing well, with the tender process for a drilling rig nearing completion.
Petrofac, which is undertaking drilling management services for the well, had identified the necessary long lead equipment to ensure the Buffalo-10 well was able to be drilled before the end of 2021, the board said.
As it said in April, following the completion of its recent placing, Advance Energy's wholly-owned subsidiary Advance Energy TL paid $20m to acquire a 50% interest in the Buffalo PSC, offshore Timor-Leste.
It added that Carnarvon had also begun the process of securing the necessary Timor-Leste government approvals for drilling the Buffalo-10 well.
"We are delighted to hear this progress from Carnarvon to ensure drilling of the Buffalo-10 well is on track for later this year," said chief executive officer Leslie Peterkin.
"The drilling of this well is transformational to Advance Energy, representing a material value catalyst for the company and our shareholders."
Peterkin said that in the success case, there was potential to deliver a gross production rate of around 40,000 barrels per day by the end of 2023, which in the current price environment would deliver "exceptionally strong" cash flow and "compelling" rates of return.
"We are very excited for what the next six months may bring and will continue to provide updates to the market as we approach the various milestones of drilling activity on the Buffalo-10 well."
At 1135 BST, shares in Advance Energy were down 2.13% at 2.3p.
10 Nov 2022 15:48