Tweaks in Falklands development plan come to light but sanctioning of Israeli player’s largest operated project still slated for 2024

Israel’s Navitas Petroleum has revamped its development plan for the Sea Lion project located off the Falkland Islands. This is said to be Navitas’ largest operated development asset and a final investment decision (FID) is scheduled to be made in 2024.

Following Harbour Energy’s decision to exit the Sea Lion project in September 2021 as it was no longer befitting its corporate strategy, Rockhopper, Harbour, and Navitas signed a detailed heads of terms deal in December 2021 to allow a clean exit from the Sea Lion project in the Falkland Islands for Harbour and a farm-in for Navitas. Afterward, the three players signed legally binding definitive documentation in April 2022 concerning Harbour exiting and Navitas entering the North Falkland Basin (NFB).

Thanks to this, Navitas acquired Premier Oil Exploration and Production Limited (POEPL), the company in which Harbour held all of its Falkland Islands licenses: PL003, PL004, PL005, PL0032, PL0033. Upon completion, the working interests were aligned across these North Falkland Basin petroleum licenses with Navitas getting a 65% interest, while Rockhopper got the remaining 35%.

Envisioned to be developed in two phases, Sea Lion and its satellite fields were independently estimated to hold approximately 520 mmbbl of 2C contingent resources. In addition, Isobel-Elaine was viewed as a potential Phase 3 development in the North Falkland Basin.

Navitas’ recent update on Sea Lion development progress came with an overhaul of the development plan to align with its static and dynamic reservoir models, resulting in the increase in certified resources in an updated NFB independent resource report conducted by Netherland Sewell & Associates (NSAI) on behalf of the company.

Based on the 2024 NSAI independent report, the certified gross 2C resources in the overall NFB have been boosted from 712 MMbbls to 791 MMbbls, representing an increase in resources of 11% in the overall NFB portfolio compared to the previous certified 2C resource, as published on March 20, 2023.

As the Israeli player has found suitable and available existing floating production storage and offloading (FPSO) vessels, it is actively working with industry vendors to secure all long lead equipment while continuing to target the FID for the Sea Lion Phase 1 in 2024 and first oil at the end of 2026.

Furthermore, the Sea Lion field development plan (FDP), optimized utilizing the selected FPSO specifications, still comprises 23 wells drilled in two phases with a 16% increase in gross 2C resources from 269 MMbbls to 312 MMbbls out of overall 791 MMbbls certified discovered resources in the NFB, according to Rockhopper.

The gross capex required to first oil has been reduced from $1.3 billion to $1.2 billion with a capex of approximately $8 per barrel. The opex across the life of the field has been materially reduced to under $17 per barrel against a background of continued industry cost inflation.

The UK-based oil and gas E&P company elaborates that this provides “very robust” economics and a lower-risk project with a lower attractive break even under $25 per barrel, compared to the $27 previously reported.

The hydrocarbons are expected to be produced through the redeployed FPSO, enabling an extended plateau for some eight years through a ‘drill to fill’ optimization, with a peak production rate of up to 55,000 bbls/d.  

Rockhopper highlights that the prolonged plateau increased total recovery and lowered cost per barrel, which means that the NPV10 remains within 5% of previously published numbers despite the initial lower plateau production rate.

The front end engineering design (FEED) is ongoing, evaluating the potential for further accelerated production ramp-up and increased capacity.

The FPSO for the Sea Lion project has a disconnectable turret enabling redeployment to another NFB field and allowing a second, potentially larger vessel to replace it on the project with increased production capacity above 80,000 bbls/d. 

While the long-term potential for the basin could utilize up to three FPSOs with a total production of around 200,000 bbls/d, this phased plan is said to minimize capex to first oil while providing flexibility for basin expansion and acceleration of production from fields beyond Sea Lion.

The Phase 1 and 2 development concept for the Sea Lion field entails 23 wells in total. As this will be a phased drilling program, 11 wells are planned in Phase 1, with 5 of them pre-first oil, and 12 additional wells in Phase 2 approximately four years post-first oil.

Rockhopper confirms that an updated FDP has been submitted to the Falkland Islands government and it is anticipated that an updated environmental impact assessment (EIA) will be handed over during 1Q 2024. The total capex for the Sea Lion project is $2.5 billion while the pre-first oil capex is $1.2 billion.