Premier Oil has signed a letter of intent with Diamond Offshore for the provision of a suitable drilling rig for its operated Sea Lion Phase 1 development in the North Falkland Basin.
Premier is the operator of the project with a 60% interest and Rockhopper Exploration is its partner with a 40% working interest.
Rockhopper informed on Monday that the LOI grants a period of exclusivity until December 31, 2018 during which time the joint venture will negotiate binding documentation based on agreed principles for the provision of the drilling unit and vendor financing.
Samuel Moody , Chief Executive of Rockhopper, commented: “2018 has already seen material progress made on our work in moving Sea Lion closer to sanction. We are delighted to have been able to enter into this LOI with Diamond with whom we enjoyed a fantastically successful, safe and cost-effective drilling campaign in the Falklands during 2010 and 2011.
“We believe that teaming up with Diamond is a significant step in our continued progress towards sanction with our partner Premier Oil. Having already signed LOIs for the provision of well services and logistical support, focus now moves to the subsea equipment suppliers where we hope to make progress during the remainder of 1Q as we continue discussions on the senior debt element of the financing plan.”
The phase one will recover 220 mmbbls of reserves in the north east and north west of the field located in the PL032 license area. It will be developed using a leased FPSO.
The Front End Engineering and Design (FEED) on Sea Lion phase 1 was completed during 2016. The process has progressed and de-risked the Sea Lion development. As a result, Premier reduced its estimate for gross capex to first oil from $1.8bn to $1.5bn.
In 2017 the focus was on the commercial, fiscal and financing elements of the project required to secure the $1.5 billion of capex required to achieve first oil.
The project is moving towards sanction at the end of this year. Rockhopper said in January 2018 that the process to select certain lender due diligence advisers had started. First oil is anticipated in 3.5 years after the Final Investment Decision (FID).
Offshore Energy Today Staff