The failure of UK-based independent explorer First Oil has resulted in partners EnQuest and Cairn Energy increasing their stakes in the Kraken heavy oil field development.
First Oil had held 15% interest in the Kraken field in the UK North Sea. However, the firm went into administration on Friday, with EnQuest and Cairn receiving 10.5% and 4.5% shares of First Oil interests for a nominal sum shortly before administrators from KPMG were appointed, increasing the firm's stakes to 29.5% and 70.5% respectively.
This will mean both firm's shares of the Kraken development will increase. EnQuest indicated that the additional net capex to first oil in 1H 2017 is estimated at US$90 million, while Cairn anticipates additional cost of US$5.5 million by the end of 2017.
Kraken is in 108-125m water depth, about 135km east of Shetland, and is estimated to contain 137MM bbl gross reserves. EnQuest expects the development, consisting 25 wells tied back to a floating production, storage and offloading vessel (FPSO), to produce, at peak, more than 50,000 boe/d after it comes on stream.
Malaysia's Bumi Armada Berhad is providing the FPSO, which is to be a conversion of the MV Prisco Alcov, which will be converted by Keppel.
The Kraken fields were discovered in 1985, when Occidental Petroleum drilled an exploration well in the Kraken South area.
Jim Tucker, Blair Nimmo and Richard Beard of KPMG were appointed joint administrators of First Oil Expro on Friday following its failed sale process.
Two subsidiary companies, First Oil and Gas Limited (FOGL) and Antrim Resources (ARNIL) remain outside of administration and are due to be taken over by Zennor Petroleum.
The firm's assets includes stakes in North Sea producing fields Mungo & Monan, Bacchus, Cormorant East and Causeway; in addition to the undeveloped discoveries Glenn and Platypus.
Jim Tucker, joint administrator and restructuring partner at KPMG, said: “The fact that their owner, First Oil Expro Limited, sold them via an administration process is a reflection of the significant challenges facing UK North Sea oil and gas companies in the current oil price environment. These sales will ensure that the group’s four largest field interests are smoothly transferred to new ownership, and provide time to resolve the position concerning the smaller assets in the group’s portfolio."
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