RE: Now in Positive Hedge territory for December30 Dec 2022 23:59
Recently answered questions
Viewing your video about thr recent drilling at Saltfleetby, the first two stages have a tick but nothing against subsequent phases. Which have been completed and when do you expect to complete the clean up phase?
Asked on 30 December 2022
Drilling operations will resume on 5th January. These will involve from 7 to 10 days horizontal drilling and will be followed by 2-3 days of cleaning, involving dispersing acid throughout the open hole to clean the pores. Then a completion will be set (a production tubing is lowered into place) over a couple of days and the well will be allowed to flow to a test separator and on to flare.
We will report meaningful flow rates as soon as they are clear to us – possibly within a couple of days. After the well settles down (we expect initial pressures in excess of 85 barg) it is next connected to the existing plant, regardless of whether or not the 2nd compressor is fully commissioned. This short tie in connection has been procured and is being installed over the next fortnight. This allows us to continue stabilising the well head flow rates and also spreads the production draw over three wells thus equalising the higher well head pressure from the new well with the lower pressures from the old wells.
We know that the existing compression equipment can comfortably handle 6.5 mmscfd (approx 65k therms/day) as we have tested it to that level, so this would be the smallest level of production we would be looking to maintain – and then rising to about double as much when the 2nd compressor is fully commissioned in February. If we are able to hold that higher plateau (a term meaning the highest level of production possible given all other conditions being equal) for the year we would have at least 40 million therms in 2023, of which under half is hedged at around 40 pence and the rest might achieve an average price of perhaps (to make the math easy) 160 pence – i.e. total revenues of around £40m before operating costs. This is what we are playing for and must not lose sight of.
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