Food for thought6 Jun 2018 17:20
Why Angus with low OPEX is the one for me.
The Avington field (PEDL70) came on production in 2007 after extensive well testing with initial rates at over 500 bopd. Rates declined quickly with a corresponding increase in water production and the field was shut in for long periods. Until the end of 2017 the field had been on production continuously since 2009, producing at low rates with >90% water cut. The field is now shut in temporarily while pressure builds up in the reservoir and until the field economics are more favourable. Estimates of recoverable volumes for Avington have been made by DCA, volumes for Avington are contingent on production being economic either through Opex reduction or increased oil price.
In November 2017, the operator calculated that the 2017 cost per barrel at Avington was �57, the estimated cost going forward, through 2018, is �80 per barrel. This increase is largely related to reduced production rather than an increase in costs.
Xodus has reviewed the historical cost breakdown for 2017 and estimate for 2018, the principle component of the Avington operating costs are related to the disposal of produced water, water cut is currently 90%.
Costs for water disposal at Avington are low compared to other recent cost estimates seen by Xodus, therefore, there would appear to be limited scope for further reductions of the variable costs incurred without reduction in water cut. An increase in oil price to over �90 per barrel would be required to give confidence that economic production could be restarted. Because of these factors Xodus have estimated the commercial risk factor to be 40%.
I'm not sure if they mean � or $ in this report. No matter, it seems very high to me.