Otto Energy declines Byron’s proposal for Gulf of Mexico well drilling

Australia-based oil and gas company Otto Energy has decided that it will not be participating in the drilling of Byron Energy’s SM 71 F4 well in the Gulf of Mexico.

SM 71 F platform; Source: Byron

In late August, Byron proposed the SM 71 F4 well, a D5 Sand extension well designated the Sausage prospect, to its 50-50 partner Otto Energy.

Under the terms of the SM 71 offshore operating agreement, Otto had until September 30 to respond. Byron was notified that Otto elected not to participate in the drilling of the well.

According to the company, the well was assigned a gross 1.26 million barrels of oil and 0.75 bcf of gas. Under the SM 71 operating agreement, Byron has 120 days to spud the SM 71 F4 well.

Byron said that it also submitted an authority for expenditure to Otto for a compressor upgrade to the jointly owned SM 71 F platform.

Otto approved the compressor upgrade to minimize production downtime while drilling. The two companies agreed the SM 71 F4 well would not be drilled until after the new compressor was.

The compressor is expected to be installed in late November or early December this year while Byron expects to spud the SM 71 F4 well in January of 2020 with completion operations to follow immediately if the well is successful. Since Otto refused to participate in the well drilling, Byron will take up 100 percent of the drilling expenses.

It is worth noting that the SM 71 F4 well is fully permitted and ready to drill and it is anticipated that the Enterprise 263 rig will be used for the drilling.

Also, during the 30-day election period, Byron and Otto discussed the SM 71 F5 well. Byron will submit the SM 71 F5 authority for expenditure and proposal in due course.

The company added that if the next well was not successful, the well would be left in a manner that it could be used for future wells such as the SM 71 F5 well by side-tracking below surface casing.

Maynard V. Smith, Byron CEO, said: “The SM 71 F4 well is an attractive target from both a reserve and risk standpoint and we look forward to drilling it early next year.

“Our seismic data does a very good job of delineating the Sausage prospect and if successful, will increase D5 Sand reserves.

“We are disappointed that Otto will not be a part of this well, but this is the right time to drill and bring on new production in the life cycle of the SM 71 platform and project.”


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