UK’s Baron Oil has agreed to an amendment of the farmout agreement with Corallian Energy under which it will now earn an eight percent working interest in UKCS license P1918, which contains the Colter prospect.
Baron said on Wednesday it would increase its working interest in the P1918 license from five to eight percent. Baron earned its initial five percent interest in early March.
The company added that the Colter well was planned to be drilled in the fourth quarter of 2018, subject to regulatory approvals, following the Wick well.
Under the amended terms of the farmout agreement with Corallian, and subject to the necessary consents, Baron will fund 10.67% of the costs related to the Colter well, capped on a pro-rata basis at a gross cost of £8.0 million ($10.5 million). Any incremental costs above this cap will be funded by the company at eight percent.
Also, an authorization for expenditure (AFE) for the Colter well has been signed for a total estimated cost of £7.5 million on a dry hole basis, including £0.4 million of back costs.
Colter lies in Bournemouth Bay, immediately southeast of the Wytch Farm oilfield which has been developed from onshore facilities. It was discovered in 1986 by the 98/11-3 well, which encountered a 10.5 meter oil column in the Sherwood Sandstone reservoir.
Based on the results of pre-stack depth migration reprocessing of 3D seismic data, significant potential lies updip of 98/11-3, which was drilled to the south of the Colter structure. The new well will target this potential.
The competent person’s report assigned gross unrisked mid-case oil contingent resources of 4 mmbbls to the section proven up by the 98/11-3 well, and gross unrisked mean-case prospective resources of 15 mmbbls to the rest of the structure extending to the west.
Corallian Energy is the operator of PEDL 1918 with Corfe Energy, United, and Baron Oil as partners.
In addition, an AFE with a total estimated cost of £5.7 million on a dry hole basis, including £0.5 million of back costs, has been signed for the drilling of the Wick well.
The company will fund 20% of the costs related to the Wick well, capped on a pro-rata basis at a gross cost of £4.2 million, with the incremental costs above this cap funded by the company at 15%.
According to Baron, the target for the Wick well drilling on UK Continental Shelf Licence P2235 is September 2018, subject to regulatory approvals.
Malcolm Butler, chairman and CEO of Baron, said: “We are pleased to have moved each of the Colter and Wick wells to a committed AFE stage. We note that costs have increased as final estimates of rig and service rates have been obtained and the joint venture will maintain pressure on the drilling management team to deliver the wells within the new budget limits.
“Both of these wells are material drill targets for Baron and we are delighted to have had the opportunity to increase our working interest in the Colter Well to 8%.”