22 Sep 2021 07:00
22 September 2021
Advance Energy plc
("Advance Energy" or the "Company")
Buffalo Project Update
Advance Energy (AIM:ADV), the energy company seeking growth through acquisition or farm-in to non-operated interests in discovered upstream projects, is pleased to provide an update on the Buffalo project offshore Timor-Leste (the "Buffalo Project") ahead of the drilling of the Buffalo-10 well.
Highlights:
· Buffalo-10 well on schedule to spud in early November 2021
· Shallow water depth of 30 metres, with reservoir depth between 3,200-3,300 metres
· Mid case recoverable volume estimate is 34 million barrels (gross, 2C contingent resource) in the Buffalo field
· Buffalo-10 considered by RISC Advisory to have an 85% probability of confirming a sanctionable development project based on the minimum economic field size
· Buffalo-10 to be retained as first production well in development program
· Discussions underway to seek to facilitate accelerated first production
· Equipment currently being mobilised for drilling
The Buffalo Project, in which Advance Energy holds a 50% working interest, involves the redevelopment of the Buffalo oil field in the Timor Sea. The field resides in only 30 metres of water, with a reservoir depth between 3,200 and 3,300 meters below the sea bed.
The previous BHP Buffalo development, of 20 years ago, demonstrated the existence of a very high deliverability reservoir containing high quality light oil that is expected to sell at a premium to Brent in today's market.
Carnarvon Petroleum Limited (ASX:CVN) ("Carnarvon"), as the operator of the Buffalo Project, is preparing to drill a well that will penetrate the remaining oil column (confirmed from when the field was still producing at the time of shut-in in 2004), and assess the extent of the revised mapped attic oil column.
RISC Advisory have certified the mid case recoverable volume in the Buffalo field to be 34 million barrels (gross, 2C contingent resource). Further, given that the RISC Advisory certified 1C resource of 16 MMstb is economic down to an oil price of US$35/bbl, it is considered that there is a strong likelihood that the Buffalo-10 well will confirm an economic development project. Accordingly, Carnarvon's drilling plans provide for the Buffalo-10 well to be retained as the first production well in a wider redevelopment program.
In light of the perceived likelihood of an economically viable redevelopment project, the joint venture of Carnarvon and Advance Energy are also working on plans to compress the timeline to first production once the Buffalo-10 well confirms the expected recoverable oil resource. These plans include engaging with industry for supply and installation of suitable equipment to produce the oil.
As announced on 2 September 2021, the VALARIS JU-107 drilling rig has been contracted to drill the Buffalo-10 well. The rig will move to the Buffalo drilling site once it has completed its current operations which are around 300 kilometres from the Buffalo location, with Buffalo drilling operations expected to commence in early November 2021. A site survey of the anticipated surface location has been undertaken, with confirmation that the location is suitable for the jack-up drilling rig.
Aside from the drilling rig, a number of ancillary contracts have now been signed with support vessels, helicopters, drilling service providers and shore base and logistics providers. Equipment is being mobilised in preparation for drilling to commence within a few weeks.
While the majority of support services for the drilling have been confirmed, the final well timing will be subject to the release of the rig from the previous operator, securing the last remaining services and equipment, and receiving the necessary joint venture and regulatory approvals.
Leslie Peterkin, CEO of Advance Energy, commented:
"Advance Energy is pleased to note from that everything is on track for the Buffalo-10 well to spud in early November. As noted in this update, the joint venture has been working hard to ensure everything is lined up to enable the safe drilling of this material well for the Company. The joint venture is confident of Buffalo-10 being both a geological and economic success, and is therefore laying the groundwork to bring the field into production on an accelerated timeline. We look forward to providing a further update to confirm that the rig is in transit to location in due course."
Enquiries:
Advance Energy plc Leslie Peterkin (CEO) / Stephen West (CFO) | +44 (0)1624 681 250 | ||
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Strand Hanson Limited (Financial and Nominated Adviser) Rory Murphy / James Harris/ James Bellman | +44 (0)20 7409 3494 | ||
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Buchanan (Public Relations) Ben Romney / Jon Krinks | +44 (0)20 7466 5000 | ||
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Tennyson Securities Limited (Joint Broker) Peter Krens / Ed Haig-Thomas | +44 (0)20 7186 9030 | ||
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Optiva Securities Limited (Joint Broker) Christian Dennis | +44 (0)20 3411 1881 | ||
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For further information, please visit www.advanceplc.com and @advanceplc on Twitter
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The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulation (EU) No. 596/2014 as it forms part of United Kingdom domestic law by virtue of the European Union (Withdrawal) Act 2018.