SYDNEY, Australia – Elixir Petroleum has agreed a conditional farmout of 85% of block 211/12b in the UK North Sea.
The unnamed farm-in company is new to the North Sea, although its management is supposed to have prior experience owning and operating oil and gas interests.
Elixir has applied 3D seismic data analysis and fluid inclusion stratigraphy studies to identify an Upper Jurassic oil prospect on the block named Tiger. The company believes this could be one of the largest undrilled exploration targets in the UK offshore sector, with potential reserves of 90 MMbbl.
Tiger is close to prolific producing fields such as BP’s Magnus, the Shell-operated Penguin cluster, and the more recent Don West development. Each of these fields, Elixir claims, could provide infrastructure to support a development in the event of a discovery.
The Tiger prospect is a direct analogue to Magnus, 5 km (3.1 mi) to the west. All of the play components, i.e. source, migration, trap, seal, and reservoir, work demonstrably at Magnus, Elixir points out.
Under the farmout agreement, Elixir’s remaining 15% interest would be carried on a partially promoted basis for drilling of an exploration well – expected to spud during the first half of next year – and a contingent appraisal well.
The exploration carry includes all costs associated with logging and flow testing, and if needed, plugging and abandonment. The farminee would recover the non-promoted part of the exploration carry from Elixir’s share of oil production revenue from Tiger.
Elixir estimates the cost of the firm and contingent wells and, a possible testing program, at around $47.4 million.
It could also be fully carried through the development phase of the project, which could cost around $79 million.