Page 11 - Euroil Week 03 2020

EurOil PERFORMANCE EurOil
Norwegian oil output hits nine- year high in December
NORWAY
Gas producers have been cutting supply because of low prices.
NORWAY posted strong figures for produc- tion in December, largely on the back of rising output at Johan Sverdrup and other new oil projects.
According to the Norwegian Petroleum Directorate (NPD), oil production soared to a nine-year high of 1.76mn barrels of oil equiva- lent per day (boepd) last month, up 4.3% month on month and 17% year on year, and 12.7% higher than forecast.
Total liquid output reached 2.08mn boepd, up 4.8% m/m and 12.7% y/y.
State oil company Equinor and its partners brought on stream the 2.7bn barrel Johan Sver- drup field in early October – two months ahead of schedule. The field is expected to be flowing at a rate of 440,000 barrels per day by the middle this year. Its output is then slated to ramp up to 660,000 bpd in the early 2020s under a second development phase, helping Norway boost pro- duction to near record levels.
Norwegian gas production came to 345.5mn
cubic metres per day in December, marking a rise of 3.2% m/m but a slight decline of 0.4% y/y. It was 0.7% above forecast.
Gas output missed monthly targets dur- ing most of last year, as result of unscheduled repairs and Equinor and others cutting supply because of bearish gas prices in Europe. It sank to a 15-year low of below 200 mcm per day in September.
Europe imported a record 76mn tonnes of LNG last year, causing Norway, Russia and other piped gas suppliers to lose business. Norwegian exports via pipelines slumped 6.3% last year to 107bn cubic metres, state transmission operator Gassco reported earlier this month.
Overall hydrocarbon production in Nor- way came to 216mn cubic metres of oil equiv- alent (3.72mn boepd) in 2019, according to the NPD, down almost 6% y/y. But it is projected to rebound this year and reach 4.4mn boepd by 2023 – now far below the all-time record of 4.55mn boepd achieved in 2004. ™
PROJECTS & COMPANIES
Egdon secures farm-in deal with Shell
UK
Egdon had limited time to find a farm-in partner.
SHARES in Egdon Resources soared on January 21, after the UK junior announced it had cut a deal to farm out shares in two southern North Sea gas discoveries to Royal Dutch Shell.
The company’s stock was 31% higher in after- noon trade in London, at £0.069 per share.
Egdon, whose main focus is onshore oil and gas in the UK, signed an exclusivity agreement in November with a “large internationally-recog- nised exploration and production company” on farming out its 100%-owned offshore P1929 and P2304 licences. The licences contain the Resolu- tion and Endeavour gas finds, estimated to hold around 7.05bn cubic metres in contingent gas resources.
Egdon reported this week it had signed a farm-in contract with Shell, which will involve the Anglo-Dutch major taking a 70% stake in the licences and becoming their operator. In return, it will cover 85% of the cost of a 3D seismic sur- vey of the two discoveries up to a $5mn limit, after which point it will pay 70% of costs.
Shell will also fund 100% of other studies and manpower expenses up until a decision on drill- ing is taken.
“This transaction validates our views on the potential of these blocks and introduces a highly experienced and respected operator to progress appraisal activity on the Resolution and Endeavour discoveries,” Egdon Managing Director Mark Abbott commented. “In difficult market conditions Egdon has secured a substan- tial carry on costs to the well investment deci- sion whilst retaining a material 30% interest in the licences.”
The transaction requires approval from the UK’s Oil and Gas Authority (OGA), which should be given once Egdon and Shell agree with the agency on the scope and timeframe of a work programme.
Time was running out for Egdon to secure a farm-in partner. In late November, the OGA agreed to extend its licences until May 31 2020, but only if the company was able to find one by the end of January.
Shell is one of the few oil and gas majors still eyeing new opportunities in the North Sea. Last year it farmed into two other southern North Sea licence belonging to London-based Cluff Natu- ral Resources (CNR). ™
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