Ping, Orcadian advancing North Sea oil project

Dec. 7, 2023
Orcadian Energy has executed a conditional agreement under which Ping Petroleum UK will take an 81.25% interest in the Pilot oil development in UK North Sea license P2244.

Offshore staff

LONDON — Orcadian Energy has executed a conditional agreement under which Ping Petroleum UK will take an 81.25% interest in the Pilot oil development in UK North Sea license P2244.

Total consideration is $3.1 million plus the payment of certain historic costs incurred by Orcadian to date. Much of this will be payable once the UK’s North Sea Transition Authority (NSTA) approves the transfer and the appointment of Ping as the new operator.

According to Orcadian, Pilot Field is one of the largest undeveloped discoveries in the Central UK North Sea (more than 78 MMbbl), with strong upside potential in the surrounding area.

Following completion of the transaction, the two companies will work to deliver a field development plan to the NSTA for a polymer flood development, which Orcadian believes could ultimately recover 5% to 10% more oil relative to the 2021 CPR scenario audited by Sproule.

Under the terms of the proposed joint operating agreement, Orcadian will retain an 18.75% carried interest in the development with Ping paying 100% of the pre-first oil workscope.

The NSTA has already granted a two-year extension to the license’s second term, conditional upon completion of the farm-out prior to the end of March 2024.

Orcadian and Ping are also negotiating a joint bidding agreement concerning a requested out-of-round application for the area covered by former license P2320, which Orcadian had to relinquish earlier this year, in support of the development. This acreage contains extensions of Pilot Field, the likely location for a wellhead platform to be installed later in field life, and the Feugh oil and gas discovery.

Orcadian CEO Steve Brown said, “Ping is the owner of the Excalibur FPSO and has engaged with the owners of a number of FPSO redeployment candidates, and we believe they can identify the right solution for Pilot very quickly.”

Fina Petroleum discovered Pilot in 1989, and the field has since been thoroughly appraised, according to Orcadian. The development plan under discussion with Ping is said to be designed partly to minimize the initial cost of the project.

12.07.2023

Courtesy Var Energi's "Interim Report Fourth quarter 2023" presentation
Courtesy Valeura Energy Inc. Corporate Overview (presentation), February 2024