Hercules Offshore’s jack-up drilling rig Hercules 205 has been released by the previous operator, Renaissance, and is expected to start mobilization to Byron Energy’s Gulf of Mexico well once the weather conditions allow it.
According to Byron Energy, the operator of several blocks in the Gulf of Mexico, the contracted rig will mobilize to the SM 6 #2 well in the South Marsh Island Block 6, in the Gulf of Mexico.
Byron recently cancelled a contract it had with Hercules Offshore for the jack-up rig Hercules 264 and swapped it with another contract for the 1979-built jack-up Hercules 205. The rig will operate for Byron under a dayrate between $49,000 and $51,000.
According to Byron, the current weather forecast indicates a possible weather window later this week. The day rate contract for the rig begins when the Hercules 205 is on location and ready to work. In anticipation of this move, Byron has opened a shore-base in Intracoastal City, Louisiana and has begun to mobilize equipment and supplies for load out to the rig once it is on location.
First well to be drilled as part of farm-out
The SM 6 #2 well is the first well to be drilled as part of Byron’s farm-out to Otto Energy Limited. To remind, in December 2015 Byron entered into a binding participation agreement with Otto Energy whereby the latter will pay a part of drilling costs to gain a stake in Byron’s three U.S. Gulf of Mexico projects.
The well will be drilled in the south west corner of a major salt dome in SM 6, located offshore Louisiana, 216 km southwest of New Orleans, Louisiana, USA.
Byron, through its wholly owned subsidiary Byron Energy Inc. (the operator), currently has a 100% working interest and an 81.25% net revenue interest in SM 6. Otto will earn a 50% working interest in SM 6 by paying a disproportionate 66.67% share of drilling costs of the SM 6 #2 well, plus reimbursing a portion of Byron’s past costs.
If Otto earns an interest in the SM 6 block, Byron’s working and net revenue interests will be reduced by 50% at the earn-in point, to 50% and 40.625% respectively.