Enegi, the independent oil and gas Company with a portfolio of assets located in the UK North Sea, Newfoundland Canada, Ireland, and Jordan has announced that, following the initial success of the strategic partnership between Enegi and Advanced Buoy Technology (ABTechnology) Limited (“ABT”), the Company has now entered into a formal Joint Venture agreement (“JV”) with ABT.
ABT is the proprietor of technology which utilises unmanned buoys to access offshore reserves to depths of 600ft, the development of which is either restricted or not otherwise economically viable.
Under the terms of the JV, Enegi and ABT will work together globally to secure and develop interests in stranded, offshore oil reserves which can be accessed utilising ABT’s technology. By using ABT’s unmanned buoy technology, the directors believe that significant returns can be generated on such marginal and otherwise uneconomic fields. Accordingly, it is expected that the technology will allow the JV partners to secure reserves, which would otherwise not be available to farminees, at a cost which is substantially below the cost of accessing reserves which can be developed using conventional methodologies. Discussions have been initiated with a number of operators whose assets meet the criteria for the application of ABT’s technology.
The buoys are typically fundable through nonrecourse project equipment leases and similar instruments. Enegi is working with its advisors to develop lines of credit which will be secured on the reserves and the equipment itself, so as not to encumber its other assets nor require calls on its shareholders for further capital.
Frank Jackson, non-executive director of Enegi Oil commented:
“The JV provides Enegi with a unique opportunity to accelerate the growth of its asset portfolio by providing a cost effective means to access unrecognised, high value oil assets which are currently considered to be stranded or marginal despite in many cases being fully appraised. The JV partners are appraising projects which are available and appropriate to the technology and are currently unable to be economically developed by conventional production systems. This JV will enable its partners, Enegi and ABT to secure bookable reserves, at a relatively low cost, building a niche but growing position in the upstream sector without taking on any excessive exploration and appraisal risk or extraordinarily additional capital exposure.
We already have a good working history with ABT. Last year, we successfully worked together to obtain two offshore licences in the 27th UK Seaward Licencing Round, by proposing the use of an unmanned buoy as the development solution. This new agreement strengthens the ties between the two companies.
Unmanned buoy technology, which is based on existing and proven processes, is particularly suitable for unlocking the value from marginal and stranded offshore fields that are considered uneconomic to develop using traditional production systems. Access to this technology will significantly enhance our competitive position in the market for such assets, allowing us to secure interests in well appraised and therefore geologically low risk fields at comparatively low costs.
In the current climate where rising oilfield service costs mean that increasingly larger fields are becoming uneconomic to develop, we believe that buoy technology will make a significant impact. The JV has already had significant interest from a number of parties looking to obtain access to the buoy technology. We are confident that the JV will help Enegi gain substantial oil and gas reserves.”