Statoil is paying US$350 million to take a “time-out” in its Kwanza exploration drilling program offshore Angola.
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The Stena Carron. From Stena Drilling. |
The Norwegian giant decided to cancel the Stena Carron rig contract after it fulfilled the work commitments in the its operated Blocks 38 and 39.
The contract with the Stena Drilling rig ends today (21 November 2014). Statoil says the costs of terminating the operations and associated services including the Stena Carron will be an onerous contract and expensed in 4Q 2014.
The drilling results in the program have so far been disappointing to Statoil. Although the company says it still sees remaining prospectivity in the basin and the acreage, more time is needed to evaluate the well results and mature new prospects before deciding on future activities.
Expenditures for 2014 now total to $3.5 billion, which includes Block 38’s Jacaré well costs that Statoil will also expense in 4Q 2014.
Statoil - Kwanza operations
Outside of Norway, the Angolan continental shelf is the largest contributor to Statoil's production. The Angolan pre-salt is a frontier play where the company is participating in eight commitment wells spread across five blocks that contributes about 200,000 barrels of equity production per day to its portfolio. In total, four wells have been completed and one well in the Total-operated Block 40 is ongoing.
Statoil’s first two operated wells in the pre-salt play, Dilolo and Jacaré, fulfill drilling commitments on Blocks 38 and 39 and have both been plugged and abandoned.
The Dilolo-1 exploration well was drilled to its pre-salt target, but failed to find any hydrocarbons, the company announced in early September. The well was the first high-impact prospect to be drilled in Block 39 and provided a valuable calibration to Statoil for other prospects in the area.
Statoil is the operator of Block 38 with 45% interest with WRG (15%), Ecopetrol (10%) and Sonangol P&P (30%).
Statoil is also the operator of Block 39 and holds a 37.5% interest with partners Sonangol P&P (30%), WRG (15%), Ecopetrol (10%) and Total (7.5%).
In April, Statoil entered into agreements to farm down a 15% interest to WRG Angola in Block 39.
The Norwegian giant is also participating in two more wells in the Kwanza basin: Total-operated Puma in Block 25 and Repsol-operated Locosso in Block 22.
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