E.ON E&P is looking to exploit a deeper discovery at its Huntington field off the UK with work progressing towards a possible development, according to partner Noreco.
The German operator and its partners in Huntington licence P1114 agreed in the first quarter to pursue a joint project “to assess the feasibility for a development of the Fulmar reservoir” that hosts the Maxwell find, Noreco said in its quarterly results statement.
The discovery, made in 2007 and appraised the same year, flowed at a rate of 4600 barrels per day in a production test and is currently estimated to hold contingent resources of 4 million barrels of oil equivalent net to Noreco’s 20% stake in the licence, implying a total volume of 20 million boe.
“Work to mature the prospect towards potential development is ongoing with positive indications,” according to Noreco.
Chief executive Svein Arild Killingland told Reuters the partners - also including Premier Oil and Iona Energy – will probably make a development decision on the discovery by the first quarter of 2015.
“It is likely to be a very cost-efficient development… it will be a very profitable investment,” he added.
The company estimates that Fulmar, which has a book value of Nkr567 million ($95.4 million), would “substantially increase” its reserves if it is decided to develop the formation under a project dubbed Huntington Deep.
A potential development would further boost throughput for the field’s Voyageur Spirit floating production, storage and offloading vessel that has been hit by several outages due to technical issues at Huntington since coming on stream about a year ago.
Notwithstanding ongoing instability at the field, Noreco still managed to narrow its loss significantly in the first quarter as it boosted revenue on higher production.
The Oslo-listed company reported a net loss for the quarter of Nkr64.5 million, compared with Nkr273 million a year earlier, as its revenue increased 78% year on year to Nkr384 million helped by stable oil prices and lower exploration costs as well as higher output.
Swedbank First Securities analyst Teodor Sveen Nilsen said the company’s earnings before interest, tax, depreciation and amortisation of Nkr166 million, versus a negative Nkr165 million a year ago, were 7% higher than its forecast.
Noreco more than doubled average output to nearly 7000 barrels of oil equivalent per day in the quarter compared with about 2900 boepd in the same period a year ago, largely due to the contribution from Huntington.
While the field produced at strong rates during the quarter, it remains dogged by ongoing technical issues including work on the BP-operated CATS gas pipeline system that is set for a further two-week maintenance shutdown in the third quarter.
Noreco said the field “now has an outlook for more stable production, but there are still challenges”.
The company expects output to resume from the shut-in Cecilie and Enoch fields off Denmark towards the end of the second quarter and in the third quarter, respectively, having put in place a temporary solution to produce from the Nini field pending permanent repairs to the latter’s host platform.
Noreco is meanwhile keenly awaiting the results shortly of a wildcat at its operated Verdande prospect in the Norwegian Sea that has estimated pre-drill oil and gas resources of between 53 million and 236 million boe, with the well nearing its main target.
The explorer is also set to participate in a first appraisal probe set to be spudded imminently at Lundin Petroleum’s high-profile Gohta discovery in the Barents Sea, with further drilling planned later this year at the Alta structure to the north.
Gohta currently holds gross contingent resources of between 111 million and 232 million boe.