Norwegian independent lands farm-in

DNO has entered a farm-in agreement with Challenger Minerals, a subsidiary of Global Santa Fe, and Palace Exploration, known as the New Partners, who will acquire 45% interest in West Heather and North Terrace in UK blocks 2/5 and 2/4a. These are satellites to the DNO-owned and operated Heather field, as well as other potential hydrocarbon accumulations. DNO will retain operatorship and 55% of the farm-out area as well as 100% interest and operatorship of the main Heather field, in block 2/5, currently producing around 5,000 b/d. The field, originally discovered by Unocal, has been producing since 1978. The total recoverable oil reserves in the two satellites is now put at 40 MMbbl,of which the New Partners's share will be 18 MMbbl. This assessment followed the drilling of two appraisal wells last year in West Heather.
DNO has plans to develop the satellites as subsea tie-backs to the Heather platform, and had been looking for partners to share development costs. Engineering work has been completed and the plans call for a subsea cluster of four producers and four injectors for the two fields, and the aim is for first production in late 2003 or early 2004. It is poised to place equipment orders, but a critical factor will be the results of a new appraisal well.
The Global Santa Fe semi-submersible
Glomar Arctic IV has been mobilized from Invergordon and will shortly spud the first of two wells on West Heather. If this is successful, it will be converted into a producer, and orders placed. Depending on the results, a second well is planned to be spudded during the first half of next year. New Partners will contribute $23 million, a substantial portion, to the drilling costs. The remaining portion of the consideration will be paid as future tariff from the farm-out
area.
DNO says that the development of the satellites provides for implementation of projects for additional oil from the Heather main field, which could secure oil production from the Heather platform until 2012. Its share of the remaining recoverable oil reserves in Heather and the satellites, after concluding the farm-in agreement, are put at 42 MMbbl.