Halo Exits UK's Pegasus Project

Netherlands' oil and gas explorer Hague and London Oil (Halo) has relinquished its 45% interest in the Pegasus gas development in the southern North Sea, it announced on December 7, describing the Spirit Energy-operated project as "increasingly risky."

Pegasus was at the centre of a dispute last year between Spirit and Neptune Energy, with the pair in disagreement over the prioritisation of capacity at Neptune's Cygnus Alpha platform that Spirit wanted to connect the project with. This led to a final investment decision on Pegasus, due in April last year, getting delayed.

The Oil and Gas Authority (OGA) intervened, advising Spirit to find alternative export routes, but a commercial solution is yet to be found. In a further setback, the Andromeda North well that Spirit drilled in the Pegasus area in December last year failed to find as much gas as hoped.

Citing these factors, Halo has "decided to fully relinquish its equity participation in the Greater Pegasus Area (GPA)," the company said. "The ongoing commitments and costs did not meet the company's requirements or strategy in the absence of any commercial solution for the GPA. "

Halo added it "prefers to focus its capital and efforts now on projects which are lower cost, lower risk, higher return and closer to infrastructure within already agreed partnerships," giving a nod to its Schooner & F5 development in the southern North Sea as an example.

The company took a position at GPA, comprising Andromeda, Pegasus West and other discoveries, in September 2018 through the acquisition of Third Energy Offshore.