North Sea Prospects - Grim or Rosy?

Oil and gas prospects for the North Sea turned slightly rosier on Friday, when the Johan Sverdrup partners agreed to to recommend Statoil as operator for all the phases of the field and Premier Oil announced that production from the Huntington field should being over the weekend. 

‘Premier is pleased to announce that production from the Huntington field (Premier equity 40 per cent) is expected to start up this weekend, ahead of schedule, following completion of planned maintenance work’ the company wrote on its website, referring to the medium-sized field operated by E.ON.

Premier is the main stakeholder, controlling 40% of the equity of the field in the Central North Sea.

Further north, Statoil was appointed operator for all the phases of the Johan Sverdrup, one of the largest discoveries in Norwegian waters, consisting of 95% oil and 5% ‘rich gas.’

The goal is to achieve a recovery factor of at least 70% from the field’ the company stated on Friday. 

Statoil also strengthened ties with Technip, awarding the French service company a subsea contract at the Gulfaks field. 

‘The GRD project scope consists of a subsea tie-back to a new Wye piece on an existing pipeline close to the Gullfaks A platform. The GRD template will be located 190 kilometers Northwest of Bergen, Norway’ reads a note, adding that the contract value is between €50 and 100 million. 

ROSY, BUT NOT THAT ROSY

However, significant write-offs also signalled that difficulties are always around the corner. Noreco, which is a partner of the Huntington field with a 20% stake, announced poor results on Friday.

‘Exploration and evaluation expenses amounted to NOK 629 million, primarily due to a write-off of the Huntington Fulmar (Maxwell) discovery in the UK, and the operating result before depreciation and write-downs (EBITDA) was negative by NOK 556 million, compared with negative NOK 29 million in the previous quarter’ reads the press release.