Advance Energy eyes expansion opportunities.. 115 Sep 2021 19:17
Advance Energy eyes expansion opportunities
Quality oil assets can still attract funding and interest even amid the current ESG environment, says Advance CEO
Timor-Leste’s Buffalo field is a “barn burner of an opportunity” says Leslie Peterkin, CEO of UK-headquartered Advance Energy, which recently farmed into the licence.
Advance bought 50pc of the decommissioned Timorese oilfield from Australian independent Carnarvon Petroleum and agreed to put up to $20mn towards appraisal drilling works. The company was able to raise funds for the move at a challenging time for the wider oil sector as it “has a very different risk profile” to other companies, Peterkin explains to Petroleum Economist.
Buffalo fit the company’s four main criteria for an asset of interest, which also partly explain why Advance is less exposed to risk than other upstream firms. Firstly, the field is something of a known quantity, having been operated by Australia’s BHP and Canada’s Nexen until 2004, when it was taken offline after output declined.
Secondly, Advance is interested only in non-operating stakes, and Buffalo will be operated by Carnarvon. This policy means Advance is not restricted to a particular or core geographic region and can instead focus on “assets where value can be added or has been missed”.
Thirdly, the firm is keen to work with established operators that have a good track record, which includes Carnarvon. And fourthly, the firm prefers two-party joint ventures—rather than consortiums with multiple stakeholders—since it allows them to work more closely and constructively with partners to ensure they can get their views across, Peterkin says.
High quality crude
Buffalo also attracted Advance’s interest due to it being a proven asset. The field produces particularly sought-after oil, which Peterkin compares to condensate because of its very light and sweet qualities. And as a result, the crude commands a premium over most other grades. This high quality helped Advance secure funding, and the firm is negotiating with a major oil company to trade the crude, with a provisional letter of interest (plus caveats) already in place.
Advance expects an initial production rate of up to 40,000bl/d, and Buffalo’s oil volume has been certified at 34mn bl. Work on the B-10 appraisal well is due to start in October, and although there may be some short delays to the rig’s arrival, it will have no impact on the project’s timeline, with results from the well expected around 35 days after spudding.
The company plans to make FID in the second half of 2022, but Peterkin says a decision could potentially come even sooner if the appraisal well confirms the site’s resources and “we get the results we expect”.
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