IOG eyes Maersk rig for Harvey appraisal well

Independent Oil and Gas (IOG) has made progress with preparations to drill the high-impact Harvey appraisal well located in the UK North Sea. The company has selected a jack-up drilling rig, appointed a well operator, and is finalizing an agreement with Halliburton for the provision of offshore drilling services.

Maersk Resilient rig. Source: Maersk Drilling

The company said on Tuesday it had signed a letter of intent with a view to contracting with Maersk Drilling for the 2008-built Maersk Resilient jack-up rig to drill the Harvey appraisal well.

The well is planned to follow on directly from the rig’s current campaign, with the spud date at Harvey currently expected to be in July. Information on Bassoe Offshore shows that the rig’s dayrate under the contract with IOG will be around $80,000.

According to Maersk Drilling’s fleet status report from February 2019, the Maersk Resilient was awarded a 120-day contract by Ithaca Energy in the UK with start date set for April.

IOG said that, in the success case, with full coring and testing, the Harvey well would be expected to take approximately two months.

The company is also close to finalizing a contract with Halliburton Manufacturing and Services to provide offshore drilling services on the Harvey well.

Fraser Well Management Ltd has already been appointed as Well Operator for the well. The relevant geophysical and geotechnical surveys for the Harvey well have already been carried out by Fugro GB Marine Ltd in late 2018.

Following the company’s successful equity fund-raise in April 2019, required long-lead items have been ordered and the relevant regulatory approvals and permits reflecting the choice of the Maersk Resilient are being submitted to the OGA for final approvals. These are expected to be granted at the relevant times ahead of the spud date to ensure timely operations.

 

Harvey objective 

 

The primary objective of the Harvey appraisal well is to confirm gas resource volumes which management estimate at 85/129/199 BCF Prospective Resources in the Low/Best/High case, with a 63% Geological Chance of Success. These estimates are the result of Pre-Stack Depth Migration (PSDM) 3D seismic reprocessing undertaken during 2018 which provided a more accurate map of the Harvey structure, which is held 100% by the company following the successful acquisition of the Harvey East license in the 30th License Round.

The PSDM work also showed up prospects in the Harvey and Harvey East licenses that could be matured into further step-out exploration opportunities drillable from a future Harvey platform. The Harvey East license also contains the Redwell discovery on which further technical work is ongoing to establish commerciality.

Harvey is centrally located within IOG’s asset portfolio, close to the fully-owned and proven 550 MMcfd capacity Thames Pipeline. IOG said that, if successfully appraised, the additional scale and synergies of a Harvey development could substantially enhance the portfolio’s overall value and returns.

 

Farm-out ahead 

 

Alongside preparations for Harvey, the company’s focus remains firmly on reaching Final Investment Decision (FID) at the earliest feasible time on its Core Project, which comprises 410 BCF, of 2P+2C reserves and resources across six discovered Southern North Sea (SNS) gas fields.

A number of well-funded potential partners are progressing their work as part the previously announced farm-out process. On success, this process could provide valuable funding optionality via a development carry which would significantly reduce the new capital required for its Core Project.

Management expects to select a preferred partner in 1H 2019, thereby enabling an optimal choice between an industrial and/or capital markets funding solution for Final Investment Decision (FID). First Gas is planned to be delivered within 20 months of FID.

Andrew Hockey, CEO of IOG commented: “We are very pleased to be working with Maersk Drilling, Halliburton and Fraser Well Management on the exciting high-impact Harvey appraisal well, which has the potential to significantly enhance our SNS gas project. The Maersk Resilient is an excellent rig which we have secured with a summer slot which, with typically more benign weather, should also help to minimize operational risks.

“In parallel, we remain resolutely focused on progressing the Core Project, and in particular pushing ahead with the farm-out process. We continue to be encouraged by the progress made with potential farm-in partners and are focused on delivering an attractive transaction that allows us to progress to FID this summer.”


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