Houston headquartered Apache has unveiled a string of discoveries it has made in the UK North Sea which could increase its total North Sea reserve base by 50% and result in investment in new production facilities.
The company says it has made two "significant" discoveries in the Beryls area, which it bought from ExxonMobil in 2012, and a "large" discovery at its Seagull prospect, about 50mi south of the firm's Forties field.
The Seagul discovery could require standalone facilities and together, it and the Beryls discoveries, could amount to some 50-70 MMboe recoverable reserves, with upside potential. Apache's year end 2014 reserves were about 140 MMboe.
Today's announcement will both offer a boost to the North Sea's ailing confidence, but also proves Apache's business plan for buying the Beryl's based on the potential upside it saw in the field. Apache has also invested heavily in new seismic across its Forties acreage since buying the fields - one of the first and largest to come on stream in the North Sea - from BP in 2003.
"Apache's exploration program in the high-potential Beryl area is off to an exceptional start," says Thomas E. Voytovich, Apache's executive vice president - International and Offshore and E&P Technology. "The success of our first two exploration wells at Beryl, combined with the Seagull discovery, could increase our total North Sea proved reserve base by more than 50%. Importantly, results obtained from the wells announced today emphasize the quality of our seismic surveys and the accuracy of our geologic model in the Beryl area.
"Our large discovery at Seagull will likely have a longer investment time-horizon as it may require dedicated production facilities, but it is expected to have a very meaningful impact on Apache's medium- and long-term production in the region."
In addition, the company said it has drilled two "significant" development wells in the Beryls area. When Apache bought the Beryls for US$1.75 million, it was with a view to exploiting pockets of untapped resources in the field.
The K and Corona wells are the first exploratory prospects drilled by Apache in the Beryls area. Each discovery proves a separate geologic concept that helps to de-risk additional drilling locations, the firm says. Future appraisal drilling will enable the company to further define the upside potential beyond 70 MMboe.
"The North Sea team has generated tremendous value in 2015 for Apache shareholders, despite a significant year-over-year reduction in capital spending," says John J. Christmann, IV, Apache's CEO and president. "The discoveries we announced today, coupled with the North Sea's substantial inventory of development locations, provide low-risk investment optionality at very attractive rates of return. Our objective is to achieve a balanced investment profile of short-, medium- and long-cycle projects across our global portfolio. The North Sea discoveries we announced today are attractive across the full spectrum of those investment time horizons. These discoveries further reinforce our confidence that our North Sea business has the ability to sustain production volumes, extend the Forties and Beryl productive lives out beyond 2030 and consistently provide significant free cash flow back to the corporation."
Details:
K Discovery - After the initial discovery with the 9/19B-18 well in June 2015, Apache successfully drilled two sidetracks into adjacent fault blocks in the Beryls area. In total, this discovery includes more than 1500ft of high-quality, oil-bearing sands within the Beryl, Linnhe, Nansen and Cormorant formations, across three distinct fault blocks. Apache is the operator of this discovery with a 55% interest, and partner Shell (45%).
Corona Discovery - The 9/18a-39A Corona exploration well, also in the Beryls area, tested Apache's first Tertiary-aged injectite prospect. The well was drilled to a true total vertical depth subsea (TVDSS) of 6411ft and logged 225ft total vertical depth (TVD) net pay in excellent reservoir-quality sandstone. Apache has a 100% interest in this discovery.
Beryl ACN Development Well - Drilled from the Beryl Alpha platform, the ACN development well encountered 131ft TVD net pay in the Nansen and 40ft TVD net pay in the Eiriksson formations. The well was successfully completed in the Nansen and came online 8 October 2015 at a test rate of 11,194 b/d and 30.4 MMcf/d. Apache holds a 60.55% interest in the well, and partner Shell (39.45%).
Nevis Central L4S Development Well - The L4S pilot well, also in the Beryl area, was drilled to a TVDSS of 9298ft and logged 114 feet TVD net pay in the Triassic Lewis formation. The pilot was followed by a high-angle producer that yielded a 30-day initial production rate of 45 MMcfd and 2166 b/d. The well has been producing since early July 2015. Apache has a 60.55% interest with partner Shell (39.45%).
Seagull Discovery - An appraisal well was drilled about 50mi (80km) south of the Forties complex in Block 22/29c in the Seagull Discovery and confirmed 672ft of net oil pay over a 1092ft column in Triassic-age sands. The well was flow tested with a facility-constrained rate of 8700 b/d and 16 MMcfd with a very low pressure drawdown. Further appraisal work will continue following the recent acquisition of a multi-azimuth 3D survey. Apache will assume operatorship of this license from Talisman Sinopec Energy UK Limited later this year subject to necessary approvals. Apache has a 35%. Partners in the well include Talisman Sinopec Energy UK (50%) and JAPEX UK E&P (15%).
Image: Forties Bravo. Photo from Apache.
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