Talos hits more pay in Gulf of Mexico well

Talos Energy has discovered more oil pay in the deeper target of its operated Bulleit well located in the U.S. Gulf of Mexico. The well will be tied back to Talos’ GC 18 facility, which is located about 10 miles west of Bulleit.

The Bulleit oil appraisal well is located in Green Canyon 21, which is operated by Talos Energy with a 50% interest. Talos’ partners are EnVen Energy Ventures and Otto Energy owning 33.3% and 16.7%, respectively.

Talos started drilling the Bulleit well in early May, using the Noble Don Taylor drillship. Following initial LWD data later in May, Talos encountered encouraging results compared to the pre-drill estimates.

The Bulleit well was confirmed as new commercial discovery in mid-June

In an update on Wednesday, Talos said that drilling operations were concluding on the Green Canyon 21 Bulleit prospect. The well encountered approximately 140 feet of net true vertical depth (TVD) oil pay in the shallow target, the DTR-10 Sand, and approximately 110 feet of net TVD oil pay in the deeper MP Sand.

Delays & additional costs

Talos added it had experienced delays and additional costs during drilling due to difficult hole conditions below the DTR-10 Sand that necessitated a side track of the original well path to a new directional plan.

Additionally, the rig was moved off location to ensure safe operations during Hurricane Barry. The well will be completed in the first half of 2020 and then tied back to the Talos-owned and operated Green Canyon 18 (GC 18) facility located approximately 10 miles west of Bulleit.

In a separate statement on Thursday, Otto Energy said that the Green Canyon 21 (GC 21) Bulleit well had been successfully drilled to Total Depth. The well drilled through the deeper exploration target, the MP sands, after intersecting oil pay in the shallower DTR-10 sand package as announced in June.

The well has now intersected the following discovered intervals: DTR-10 interval –net 140 feet of TVD oil pay encountered; and MP interval – approximately net 110 feet of TVD oil pay expected to be delivered in high quality reservoir consistent with analogue wells in the GC18 field.

Logging evaluation of the deeper MP sand has included the recovery of fluid samples using a Reservoir Description Tool (RDT) that will be used to optimize the development plans for the discovery.

Otto noted that the development would involve the use of a subsea completion that is common for projects of this nature and water depth in the Gulf of Mexico.

Costs exceed pre-drill estimates for Otto

Otto also stated that, due to delays experienced during drilling operations, the cost of drilling the well had exceeded the pre-drill estimates of $9 million net to Otto. The effect of these events is now expected to increase Otto’s financial exposure to the Bulleit well by approximately $6.5 to $7.5m net to Otto.

Otto also advised that it had for some time been progressing its ability to finance its development requirements and that it is now in late stage negotiations with a select group of major financial institutions to provide development capital funding for the GC21 development and future capital developments within Otto’s growing portfolio of high quality oil and gas assets.

The successful acquisition of wireline logs over the MP sand and confirming commerciality of the GC 21 Bulleit development has been the last element to allow negotiations to be finalized.

Otto expects to finalize this financing in the near term which will include any cost overruns as part of the delay in GC 21 drilling.

Otto’s Managing Director, Matthew Allen, commented: “This is Otto’s fourth commercial discovery in the Gulf of Mexico and will be a highly important well in delivering the planned 5,000 bopd production target by the end of 2020. Combined with Otto’s existing production assets already on stream, the completion of the GC21 field in the first half of 2020 will see Otto deliver on this important milestone target.

“With further development and exploration drilling activities still yet to be completed in the current program, Otto is extremely pleased with the progress that has been made in such a short period of time to build a successful independent oil and gas business partnering with some of the best operators in the Gulf of Mexico oil and gas region.

“The GC 21 “Bulleit” has been a very challenging well to drill and has been capably managed by the Talos Energy operational and drilling team. Otto would like to congratulate the Talos team on the outcome of the GC 21 “Bulleit” well and Otto looks forward to building on this successful result.”