UPDATED: Equinor forfeits $86 million after exiting exploration acreage offshore Canada

Norwegian major Equinor has relinquished four exploration licences (ELs) in the prolific Flemish Pass basin offshore Newfoundland & Labrador, Canada, losing more than C$110 million (US$86.45 million) of security deposits in the process.

In addition, China’s CNOOC surrendered a deepwater licence after disappointing results from last year’s Pelles-1 wildcat, while US supermajor Chevron also quit a licence in the basin where it had been mulling plans to drill a wildcat.

Equinor has handed back ELs 1139, 1140, 1141 and 1142 where it had tentative plans to drill exploration wells.

According to the Canada-Newfoundland & Labrador Offshore Petroleum Board (CNLOPB) - the upstream regulator - the total amount forfeited by Equinor is just over C$110 million.

The most significant forfeitures of C$53.3 million and C$48.6 million relate to ELs 1140 and 1141, respectively.

An Equinor spokesperson confirmed that the company has relinquished the four licenses and explained the rationale behind the decision.

"The reason for relinquishing the acreage is that after acquiring these licences in 2016 we have matured our understanding and position in the Flemish Pass basin and as there are no further exploration plans in those areas, these operated licences have expired."

CNOOC, meanwhile, decided to surrender its 100%-controlled EL 1144 before the acreage entered its licence’s second exploration period.

Drillship Stena Forth drilled the Pelles A-71 exploration well between April and July 2020 but failed to find commercial hydrocarbons.

This probe was drilled in 1162 metres of water and targeted Cretaceous sands as opposed to the Jurassic sands which had been so successful in this basin for Equinor, operator of the greater Bay du Nord oil project.

CNOOC’s forfeiture amount for EL 1144 will be determined later this year after the board reviews the operator’s allowable expenditure credit application.

According to a CNLOPB document, CNOOC paid a reduced security deposit of C$60.5 million for this licence - some or all of this could now be forfeited.

Chevron relinquished EL 1138 a year after being given the go-ahead to drill a probe in this West Flemish Pass basin tract.

Chevron held a 50% stake in this acreage, with French giant TotalEnergies being its sole partner.

The forfeiture amount for the relinquished Chevron EL 1138 will be determined and available on the C-NLOPB website, once finalised in the coming months.

Chevron paid in a security deposit of almost C$10.8 million for this tract.

Both Equinor and Chevron relinquished this acreage because neither had drilled validating wells during the first exploration periods of these ELs and no drilling deposits were filed to extend the licences by one year, said the CNLOPB.

ExxonMobil, meanwhile, has forfeited just over C$1 million after handing back EL 1136 to the government last year.