London-listed oil company Premier Oil has firmed up its previously announced intention to order subsea production systems for its Sea Lion development in the Falkland Islands from Dril-Quip.
The company has entered into a Front End Engineering and Design (FEED) contract and frame agreement with Dril-Quip for the supply of the subsea systems. The frame agreement replaces the previously announced letter of intent, Dril-Quip said on Thursday.
The current estimated value of the equipment portion of the scope of work is $207 million which includes plans for up to 30 subsea production systems, including wellheads, horizontal trees, tubing hangers, control systems, associated production and injection manifolds and subsea umbilicals.
Under the frame agreement, it is envisaged that Dril-Quip will provide vendor financing for up to 30% of the equipment portion of the contract. Formal contract award will be subject to the agreement of a definitive contract and Premier taking a final investment decision.
Blake DeBerry, President and Chief Executive Officer of Dril-Quip, stated, “We are excited that Premier has chosen Dril-Quip to be their trusted provider of subsea equipment for Sea Lion and that Dril-Quip’s scope of work for the project is progressing according to plan. We will continue to support Premier as they work towards FID and sanctioning for this project. As we look to the future, we will leverage our technically innovative products, first-class service and strong balance sheet to provide the equipment and support for major projects around the world.”
In its recent half-year report, Premier Oil said that the main focus for the period ahead would be on securing senior debt funding for the project, ahead of a final investment decision.
The initial phase, Sea Lion Phase 1, will commercialize 220 mmbbls (gross) in PL032. The development concept entails subsea wells tied back to a leased FPSO.