LONDON – Ophir Energy says it is following the industry trend of prioritizing capex to protect its balance sheet and reduce its cost structure after the fall in the oil price.
One positive outcome of the sector-wide reduction in activity is that service costs too have dropped, the company adds, with seismic costs now at one-third of 2014 prices.
In February, 3D acquisition started over the company’s acreage offshoreMyanmar. Ophir says it has been able to triple the size of the survey for the same cost as originally budgeted.
This year the company will progress its two LNG projects inTanzania and Equatorial Guinea, both scheduled for an investment decision in 2017. At present, both projects have low capital requirements.
Early last year, Ophir and its partners in Tanzanian offshore blocks 1, 3 and 4, and the block 2 partners Statoil and ExxonMobil, formed a team to develop an integrated LNG project. They are currently conducting pre-front-end engineering and design (FEED) studies, with selection of a preferred project concept likely this year followed by entry into full FEED in 2016.
Earlier this year, Ophir served notice that it does not intend to continue into the next phase on the block 3 license.
As for the company’s gas discoveries inblock R offshore Equatorial Guinea, last November it signed a memorandum of understanding with a midstream partner for a floating LNG vessel. This will likely be capable of producing around 3 MMt/yr for a base-case production profile with a plateau life of around 18 years.
The company is working toward a formal declaration of commerciality, submission of a development and production plan, and finalization of the project agreement ahead of a final investment decision in 2016. However, the company wants to reduce its equity interest in block R to help fund its costs.
Management estimates prospective resources across the block at 3.4 tcf (96 bcm), although this figure could increase following results of ongoing core and log analysis from the Fortuna 2 appraisal well.
There could be further upside potential of up to 7.7 tcf in other prospects in the exploration area, although these are distal, low relief, stratigraphic traps that are high-risk targets.
Last March Ophir entered an agreement with WHL Energy to acquire a 75% operated interest inSeychelles offshore blocks PEC 5B/1, 5B/2 and 5B/3, located south of the islands in the Indian Ocean, in water depths of less than 75 m (246 ft).
They are part of a frontier basin with numerous large potential structural oil targets. Four wells drilled in the area all encountered hydrocarbons.
Last July a 1,500-sq km (579-sq mi) 3D seismic survey was completed, and final interpretation is expected to be delivered this year. The aim is to draw up a prospect inventory ahead of the drill/drop decision deadline. Drilling could follow in 2016.
Offshore Kenya, Ophir has a 100% interest in block L9, thought to contain multiple play systems in carbonate and clastic reservoirs. BG’sSunbird-1 well, drilled last year in block L10a south of L9, reportedly encountered both gas and liquids in the Miocene carbonate play.
Earlier this month the company started a farm-out process to L9 ahead of finalizing its program for the remainder of the current exploration period.
In the Asia/Pacific region, the company has a 95% operated interest in deepwater block AD-03 offshore Myanmar. This is in the Rakhine basin, on trend with the 9 tcf-plus Shwe gas field which is in production and exporting to China.
Ophir expects a 3D seismic survey over the block’s entire 10,000-sq km (3,861-sq mi) area to start in the next few months.
Following its acquisition of London-basedSalamander Energy, Ophir plans to resume exploration drilling this year on the company’s low-cost, high-value prospects in the G4/50 block in the Gulf of Thailand.