Carnarvon set to drill Buffalo well in fourth quarter of 2021

Australian oil exploration company Carnarvon Petroleum has decided that the drilling of the Buffalo-10 well offshore Timor-Leste would occur in the fourth quarter of 2021.

Carnarvon announced a binding agreement with Advance on 17 December 2020 where it will acquire up to a 50 per cent interest in the Buffalo project.

In 2021, Carnarvon confirmed the farm-out of Buffalo to Advance with the drilling of a new well on the field set for the second half of the year.

Following completion of the farmout to Advance Energy, Carnarvon received $20 million to fund the drilling of the Buffalo-10 well. This means the drilling will be at no cost to Carnarvon unless the well costs more than $20 million.

Carnarvon said on Tuesday that Petrofac, which is undertaking the drilling management services for this well, has identified the necessary long-lead equipment to ensure the Buffalo-10 well will be drilled before the end of the year.

According to the company, the procurement of long lead equipment has commenced, with orders placed for the supply of conductor pipe, well head, liner hanger, and associated services. This long-lead equipment is planned to be available before the end of the third quarter of 2021 so that the drilling could start in the fourth quarter.

A tender process for the drilling rig is also nearing completion, with the requirement for a suitable jack-up rig to be available in the fourth quarter of this year. Carnarvon has also started the process of securing the necessary Timor-Leste Government approvals for the drilling the well.

It is worth noting that the two partners stated previously that they would look to develop the field quickly to take advantage of the strengthening oil markets.

Carnarvon managing director and CEO Adrian Cook said: “I’m pleased to be able to report that the Carnarvon and Petrofac teams are making clear progress in our preparations to drill the Buffalo-10 well this year.

“A drilling result that meets pre-drill expectations will provide a material value catalyst for Carnarvon and its partner, particularly given the low capital and operating costs per barrel that are expected to arise from production operations.

“The nature of the field, particularly in terms of it being in shallow water, also enables a development facility to be installed in a timeframe that has the potential to result in the generation of earnings and cash flows well ahead of that arising from our larger Dorado development”.

In a separate announcement, Advance Energy’s CEO Leslie Peterkin stated: “The drilling of this well is transformational to Advance Energy, representing a material value catalyst for the company and our shareholders.

“In the success case, there is potential to deliver a gross production rate of around 40,000 barrels per day by the end of 2023, which in this current pricing environment would deliver exceptionally strong cash flow and compelling rates of return”.

As for Buffalo, the field was originally discovered in 1996 by BHP and subsequently developed using four wells drilled from a small, unmanned wellhead platform installed in 25 metres water depth, tied back to an FPSO.

The previous project was decommissioned in 2005 due to low oil prices and limitations on seismic processing capability to optimise well locations at that time. No facilities were left behind and all wells were safely plugged.