EnQuest pursuing full control of Magnus in the North Sea
EnQuest is looking to raise $138 million via a shares issue in order to acquire outright ownership of the Magnus oil field east of the Shetlands from BP.
In January 2017, the company agreed to terms for an initial deal giving it a 25% interest in Magnus and associated infrastructure from BP, with an option to subsequently take a further 75% in Magnus and to increase its stakes in the Sullom Voe Terminal on Shetland to 15.1%, and in the Ninian and Northern Leg gas pipelines in the UK North Sea to respectively 18% and 41.9%.
The total consideration for exercising the Magnus option, which EnQuest believes would add 60 MMbbl to its 2P reserves, is $300 million, plus an arrangement under which EnQuest and BP share the net cash flow generated by the 75% interests on a 50:50 basis (subject to a cap of $1 billion received by BP).
As the new operator of the field, EnQuest has this year drilled and completed the M-62 and M-63 wells during an infill campaign.
The results suggest further potential for low cost wells on un-swept areas of the field, while also improving understanding of the subsurface picture.
EnQuest plans to raise an additional $27 million to fund the Canute and T10/T11 Magnus infill wells targeting separate areas of the field, based on analytical and reservoir simulation studies.
These should add around 5.8 MMbbl to 2P reserves and 3,500 b/d to production.
Performance at Magnus has been strong, the company said in a results statement, following plant de-bottlenecking, completion of a maintenance shutdown ahead of schedule and first production in May from the M-62 well.
The subsequent M-63 well, which was completed below budget and ahead of schedule, drew on lessons learned from drilling M-62, and production here should start in the next few days.
Water injection performance has been strong, EnQuest added, with high uptime. The company plans to increase injection capacity within the water system by reactivating the second of two de-aeration towers on the platform, and through improvements to pump operations.
As for the company’s other UK North Sea operations, the Dunlin bypass export project was sanctioned in June (the Dunlin field platform, currently undergoing decommissioning, has handled production from various third-party fields in the area).
Once this program is completed, volumes from the Thistle and Dons fields will be exported via Magnus and the Ninian pipeline system to Sullom Voe. Installation of the new pipeline should begin next spring.
At the end of August, EnQuest completed the first five of six well abandonments atThistle ahead of schedule and below budget.
AtKraken, lower water injection rates and extra maintenance of the sea water coarse filters have impacted reservoir pressure, suppressing production. However, production has risen following completion of filter maintenance, averaging around 33,000 b/d in July and August.
All subsea infrastructure has been installed for the DC4 drill center, which will now be developed with three wells instead of the four originally planned.
Drilling here should start in the next few weeks, followed by first production in early 2019.
In June, the company secured approval for a new pipeline serving the Scolty/Crathes tieback to theGreater Kittiwake Area complex in the UK central North Sea. This, it says, should significantly improve production levels: installation should get under way next summer.
Following a three-well workover campaign (electric submersible pump-related) at the Alma/Galia fields in the same region, production has improved.