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Murphy reports Gulf push
GULF OF MEXICO
US independent Murphy Oil has announced that it is proceeding with three new projects in the deepwater Gulf of Mexico. e news came in the company’s second-quarter results.
Murphy has sanctioned the development of the King’s Quay oating production system (FPS) facility, which will receive and process up to 80,000 barrels per day (bpd) of oil. e other two developments – Khaleesi/Mormont and Samurai – will be tied back to King’s Quay, anchoring production for the FPS.
e Khaleesi/Mormont eld development will consist of seven subsea wells, of which four were previously drilled, while Samurai will comprise four wells. Khaleesi is located in Green Canyon Block 390, while Mormont is in Green Canyon Block 478 and Samurai is in Green Can- yon Block 476.
King’s Quay is anticipated to enter service in mid-2022.
“Our planned execution on our new Gulf of Mexico revitalised asset base continues,” Mur- phy’s president and CEO, Roger Jenkins, said in a statement. “ ese projects have outstanding returns o ering high-margin production and a freecash owrunwaygoingforward,”headded. “ is new FPS asset could be easily monetised, and we are currently evaluating all our options,” Jenkins said, noting that initial production from the new developments was anticipated to exceed 30,000 barrels of oil equivalent per day (boepd) on a net basis at start-up. Output will then be ramped up.
e sanctioning of King’s Quay in particular marks a welcome development for the deepwa- ter Gulf, where few new platforms have been approved since the oil price downturn started, with operators focusing on subsea tiebacks instead.
Consultancy Wood Mackenzie has been reported as valuing Khaleesi-Mormont and Samurai at over $2bn with a development cycle breakeven point of less than $35 per barrel of Brent crude.
e new projects come a er Murphy closed a deal to buy Gulf assets from subsidiaries of LLOG Exploration for $1.2bn, as well as com- pleting a separate deal to sell its Malaysian business to Thailand’s PTT Exploration and Production (PTTEP).
“We plan to spend approximately $140mn on our newly acquired Gulf of Mexico assets, o set- ting the previously allocated capital of $105mn in 2019 for our discontinued operations in Malaysia,” Jenkins said.
Murphy said the LLOG assets had contrib- uted one month worth of output in the second quarter, and had averaged roughly 8,800 boepd during the quarter, exceeding guidance by over 1,200 boepd. e company also drilled and com- pleted the Dalmatian #2 well in Desoto Canyon Block 4 during the second quarter, with rst oil
expected in the fourth quarter. At the company’s non-operated Lucius eld additional wells were also brought online during the quarter.
Since the end of the second quarter, Murphy has also drilled what it describes as a successful exploration well at Ho e Park #2, in Mississippi Canyon Block 122, in which it has a 60% inter- est. e total net cost of the well was roughly $20mn. Murphy said the well had encountered oil in multiple zones and the company was now completing the evaluation of the nd. Its further third-quarter Gulf activity includes the tie-in of the new Dalmatian well to existing infrastruc- ture and the completion of the previously drilled Nearly Headless Nick well in Mississippi Canyon Block 387. Nearly Headless Nick will be tied back to the Delta House facility, and rst oil from the well is anticipated in the fourth quarter of the year.
Murphy also said it was planning to initiate a workover at the Chinook #5 well in Walker Ridge Block 425. e company expects to bring the well online in rst quarter of 2020.
Murphy’s o shore business produced 65,000 boepd during the second quarter of 2019, with liquids comprising 91% of this. e company’s Gulf production during the quarter accounted for the bulk of its offshore output, averaging 58,000 boepd, and consisting of 90% liquids. e remaining 7,000 boepd came from operations o shore Canada, comprised of 100% liquids.™
The King’s Quay FPS facility will receive and process up to 80,000 bpd of oil.
The new projects come after Murphy closed a deal to buy Gulf assets from subsidiaries of LLOG Exploration for $1.2bn.
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