Creditors vote in favor of Premier’s North Sea deal despite objections

UK oil and gas company Premier Oil has gained approval from the majority of its creditors for the schemes of arrangement required for the acquisition of North Sea assets from BP and Dana. The schemes still remain subject to a court approval.

BP’s Andrew platform included in the deal with Premier; Image source: BP

Premier Oil received a court approval to go ahead with a plan to have its creditors vote to extend debt maturities and buy UK North Sea fields from BP and Dana in mid-January and convened the creditor meeting for February 12 despite objections by its largest creditor ARCM.

Premier announced on Wednesday that the scheme meetings of the super senior scheme creditors and senior scheme creditors of Premier and Premier Oil UK Limited were held earlier today.

The scheme meetings were held for the purpose of proposing resolutions to the scheme creditors to approve the schemes of arrangement required to implement the announced UK North Sea acquisitions, related funding arrangements, and extension of Premier’s credit facilities.

According to Premier, the resolutions at each of the scheme meetings were approved by the relevant majorities of the scheme creditors in each class being a majority in number representing at least 75% in value of those present and voting (in person or by proxy).

Namely, of the super senior scheme creditors, 86.81% in value of those voting approved the schemes with 99.30% in value voting, and of the senior scheme creditors, 83.86% of those voting approved the schemes with 96.51% in value voting.

ARCM: Court hearing not a ‘rubber-stamping’ exercise

The schemes remain subject to approval by the Scottish Court of Session with the sanction hearing currently scheduled to start on March 17, 2020.

Earlier on Wednesday, before the vote, Premier’s largest creditor, which has been opposing the acquisition since the start, said it would vote against the scheme proposal “as it believes the proposed acquisitions expose the company and its stakeholders to significant incremental risks.”

ARCM, the creditor, also said that regardless of the result of the vote, the March court hearing “is not a ‘rubber-stamping’ exercise and the Court will consider issues beyond the outcome of the vote at the creditors’ meetings in determining whether or not to sanction the schemes.”

At the sanction hearing, creditors who object to the schemes may raise their opposition, ARCM said.

“Above all, the Court must be satisfied that the statutory requirements have been met, the vote is fairly representative of the creditors concerned, there is no ‘blot’ on the Schemes, and that the Schemes are fair,” ARCM stated.

ARCM reiterated it would vigorously oppose the schemes and would take all necessary steps to do so, including opposing the sanctioning of the schemes.

Offshore Energy Today Staff


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Premier files decommissioning plan for Huntington field FPSO

Oil and gas company Premier Oil has filed its decommissioning program for the float-off of the Huntington field FPSO, located in the UK North Sea, to the UK authorities.

Voyageur Spirit FPSO; Source: Teekay

The Premier-operated Huntington field is located in block 22/14b of the Central North Sea, approximately 230km from Aberdeen, 28km from the UK/NOR median line, in a water depth of approximately 89m. Production started in 2013. Produced oil is stored in cargo oil tanks and exported using shuttle tankers. Dehydrated gas is also exported to shore via the Central Area Transmission System.

The Huntington field is currently producing via Teekay’s Voyageur Spirit FPSO, and the operation will be continued until relevant notices are made to cease production.

Premier said it had investigated various alternative production strategies to further extend the life of the Huntington field, but no viable alternative to decommissioning has been identified.

Therefore, Premier field a document, which contains the decommissioning program for the departure of the Voyageur Spirit FPSO and the removal of the associated riser system in the Huntington field.

Removal of the Voyageur Spirit FPSO is part of the overall Huntington field decommissioning project, the scope of which is split up into three phases, proposed to be executed over a seven-year period.

The FPSO will be removed in phase 1. The remaining subsea infrastructure, pipelines, structures and stabilisation features, will be decommissioned during phase 2. The wells plugging and abandoned (including drill template removal), environmental surveys, debris clearance (and verification) will be carried out in phase 3.

The Voyageur Spirit will be utilized for the initial decommissioning activities, namely the flushing/de-oiling of the subsea infrastructure i.e. manifolds, risers, subsea pipelines and umbilical, and to support with the implementation of positive isolations. The FPSO is then not required to perform any further decommissioning and it is proposed that the vessel is removed thereafter from its current location.

Activities associated with subsequent decommissioning stages of the subsea pipelines, umbilical, risers and other subsea infrastructure will require the services provided by other specialist vessels.

The FPSO is on the Huntington field under a lease and operate contract between Premier Oil and Teekay. As Teekay’s business model includes the deployment and re-deployment of floating production facilities, leading up to CoP and/or post Phase 1 decommissioning, Teekay will pursue and/or secure alternative arrangements for redeployment of the floating production facility.

Huntington field layout – pre-sailaway

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Creditor calls for ‘transparent responses’ over ‘unclear details’ of Premier’s North Sea deal

Premier Oil’s largest creditor, ARCM, has raised new concerns regarding Premier’s proposed acquisition of North Sea assets from BP and Dana Petroleum and called upon Premier to provide full and transparent responses. 

BP’s Andrew platform included in the deal with Premier; Image source: BP

Premier in early January proposed to buy the assets through a scheme that would allow it to extend debt maturities. Despite ARCM’s objections, Premier last week got an approval from the court to go ahead with the plan to have its creditors vote to extend debt maturities and buy the North Sea assets.

Upon receiving approval from the court, Premier said it would convene the creditor meetings for the schemes, to be held on February 12, 2020, with the schemes sanction hearing expected to take place in March.

ARCM, Premier’s largest creditor, holding more than 15% across the company’s debt instruments with blocking positions in two of them, on Friday noted Premier Oil’s announcement on the convening of scheme meetings to once again extend debt maturity and to approve the making of acquisitions.

ARCM reiterated that the proposed acquisitions would expose the company and its business to significant incremental risks.

ARCM’s opposition to these proposed acquisitions has to be considered within the context that ARCM has not previously opposed any of the company’s consent requests involving investments since it became a lender to the company in 2016, the creditor said.

Upon a review of Premier’s January 7 presentation, ARCM noted that there were “a number of important details which are unclear yet are critical to enable stakeholders to meaningfully assess the merits of the acquisitions.”

ARCM also said that, over the next few weeks, it would pose a series of questions to the company relating to the acquisitions and called upon Premier to provide full and transparent responses to its stakeholders.

Offshore Energy Today Staff


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JDC scoops another deal for Hakuryu-11 jack-up rig

Japan Drilling Company has signed a drilling contract for its Hakuryu-11 jack-up rig with an unnamed client in Vietnam.

The jack-up rig “HAKURYU-11” / Image Copyright: Japan Drilling Co.,Ltd.
The jack-up rig “HAKURYU-11” / Image Copyright: Japan Drilling Co.,Ltd.

JDC said on Thursday the rig would be drilling subcontracted to PetroVietnam Drilling & Well Services Corporation who has secured the drilling contract from the unnamed operator.

The five-well drilling contract offshore Vung Tau, Vietnam, is expected to start in October 2019 and will take 300 days to complete. The operator will have an option to extend for one more well, which should take another 60 days.

The Hakuryu-11 rig is of the KFELS Super B Class and is a 3-leg self-elevating cantilever type drilling rig. It has a maximum operating water depth of 425 feet and a maximum drilling depth of 35,000 feet. The Hakuryu-11 was constructed by Keppel FELS Limited, Singapore, in May 2013.

Before embarking upon this Vietnam contract, the rig will first be deployed to drill for Premier Oil in Indonesia, under a four-well contract awarded in November 2018. JDC at the time said that the contract with Premier Oil would begin either in March or April, 2019.

According to Bassoe Analytics data, the Premier Oil contract is set to begin on March 30, and it has an estimated dayrate of 65000. This contract is expected to complete in mid-September 2019.

Worth noting, Bassoe has earlier this week issued it monthly jack-up report. The report shows that global jack-up utilization has surpassed 70% and is expected to continue rising as Mexico, Southeast Asia, and West Africa demand firms up.

“We see current fixture rates (for late-2019 and 2020 start) as stable or trending up in nearly all regions,” Bassoe said.

Bassoe Analytics tool shows there are 302 rigs currently drilling, with 112 warm/hot stacked, and 73 cold stacked units. There are also 70 jack-up rigs under construction.

Offshore Energy Today Staff


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Ensco 8503 rig going back to Mexico for more Zama drilling

A semi-submersible drilling rig that last year helped find the two-billion barrel Zama discovery, in what was Mexico’s first private offshore well in history, is set to return to the Mexican waters where the operator will be working to learn more about the discovery ahead of the final investment decision in 2019.

Ensco 8503 – Photo by Cris DeWitt – Image shared with photographer’s permission

In an operational update on Thursday, Premier Oil, a partner in the Talos-operated Zama-1 discovery in the Block 7, said the appraisal drilling at the discovery would start in the fourth quarter of 2018, using the Ensco 8503 semi-submersible drilling rig. The rig is currently in the U.S. Gulf of Mexico, where it has a contract with Deep Gulf Energy, until mid-August, 2018.

Sharing plans on Zama drilling, Premier Oil CEO Tony Durant said on Thursday: “We’re moving forward with the appraisal program of the Zama discovery and we expect at least one if not two wells to spud in the second half of the year.”

Talos and Premier Oil have together with PEMEX submitted a notice of pre-unitisation agreement for the Zama discovery to SENER, the Mexican Ministry of Energy, for approval.

The reason for this is the fact that the Zama field extends to a nearby block owned by Pemex. Such an agreement is used to define how parties to licenses which contain a common hydrocarbon reservoir will jointly evaluate the reservoir to submit a common field development plan, including a plan for unitization.

Approval of the appraisal programme by the CNH, the Mexican hydrocarbons regulator, is anticipated during the third quarter.

Elsewhere in Mexico, two weeks ago, Premier signed the PSCs for its three new Mexico licenses – Block 30 in the Sureste Basin and Blocks 11 and 13 in the Burgos Basin.

The company plans to start working on maturing the prospectivity of these blocks with the Wahoo prospect on Block 30, which exhibits DHIs analogous to those on Zama, being the priority for early drilling.

Zama-1

As previously said, the Zama-1 well is the first offshore exploration well drilled by a private company in Mexico. The well was spudded on May 21, 2017, some 60 kilometers (37 miles) offshore Dos Bocas utilizing the Ensco 8503 drilling rig, and completed in late July the same year.

The entire Zama Field is estimated to hold between 1.5 billion and 2 billion barrels of oil equivalent and is considered one of the largest shallow water fields discovered in the past 20 years.

Talos, the U.S. based operator of the block containing the Zama project has previously said it expected to announce the final investment decision for the project in 4Q 2019 or 1Q 2020, with first oil expected in 2022. Production would be ramping up through 2024, as additional facilities are installed in the field.

Talos has said Talos said that Zama discovery could contribute nearly 10% of Mexico’s oil production by 2024.

The plan is to develop Zama with three production platforms across the structure. The field will continue to be developed through 2024 when Platform C is expected to be installed.

Offshore Energy Today Staff

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Appraisal at Mexico’s billion-barrel offshore find to start in 2018?

Appraisal drilling of Mexico’s first private offshore oil discovery Zama-1 is expected to begin in late 2018, at the earliest.

This is according to Premier Oil, a partner in the project operated by Talos, which in July this year struck the historic Zama oil discovery of more than a billion barrels.

The discovery was historic in that it was the first offshore exploration well in Mexico’s history drilled by the private sector, following a recent energy reform.

In an update this week, UK-based premier oil said that the partners have begun talks with Pemex over a pre-unitization agreement to enable an appraisal program of the Zama discovery „in late 2018 or early in 2019.“

Preliminary analysis of the Zama well, located in Block 7, offshore Mexico, indicated initial gross original oil in place estimates for the Zama-1 well of more than 1 billion barrels, which could extend into a neighboring block.

Since the neighboring block, into which Zama discovery extends, is operated by the Mexican oil company Pemex, the Zama partners are now in talks over a pre-unitization agreement.

Such an agreement is used to define how parties to licenses which contain a common hydrocarbon reservoir will jointly evaluate the reservoir to submit a common field development plan, including a plan for unitization.

Zama-1

As previously said, the Zama-1 well is the first offshore exploration well drilled by a private company in Mexico. The well was spudded on May 21 some 60 kilometers (37 miles) offshore Dos Bocas utilizing the Ensco 8503 drilling rig, and completed in late July.

The entire Zama Field is estimated to hold more than 1.5 billion barrels of oil equivalent and is considered one of the largest shallow water fields discovered in the past 20 years.

Talos, the operator of the discovery, holds a 35% participation interest, while Premier Oil and Sierra Oil & Gas as its partners have 25% and 40% participation interests, respectively.

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Premier Oil lifts Catcher plateau production expectations

UK North Sea Catcher field, Premier Oil’s crown jewel set to start oil production in 2017, might achieve higher plateau output rate than initially anticipated.

According to Premier Oil, ten wells have been drilled to date at the project. The drilling results have led the operator to be optimistic that a higher plateau production rate can be achieved.

The company didn’t go into details on what numbers might be reached. Premier Oil has earlier stated the Catcher’s expected production rates would be around 50 kboepd (gross).

The field will be developed via an FPSO currently under construction in Singapore.

Premier has said that a review is now underway to understand the potential additional production capacity available from the FPSO.

On the budget side, Premier said total capex forecast remains at $1.6 billion, 29 per cent lower than the sanctioned estimate.

As for the FPSO, Premier Oil has informed that good progress is being made on the unit with the construction work for the installation and integration of the topsides complete, while the construction scope in the hull is nearing completion.

Commissioning is underway and this will continue up until sailaway. The company did not share the expected sailaway date.

Worth noting, for the first quarter of 2017, Premier’s oil and gas production grew drastically to 82.6 thousand barrels of oil equivalent per day, compared to 57.3 kboepd last year.

The growth was mainly boosted by its UK assets where Premier produced 45.7 kboepd, as a result of a full contribution from the former E.ON assets and the Solan field, up from 17.6 kboepd a year ago.

Offshore Energy Today Staff

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Premier orders GE subsea equipment for Natuna Sea project

Image source: Premier Oil

GE Oil & Gas has been awarded a contract with Premier Oil for subsea trees and wellheads for the Bison, Iguana, and Gajah Puteri fields in the Natuna Sea, offshore Indonesia.

GE said on Tuesday that the scope of the work covers subsea trees and wellheads, rental tools and field service support during the installation and commissioning stage.

For the initial phase, Premier will issue a call out for three sets of subsea trees and wellheads with deliveries anticipated by the first quarter of 2018.

The subsea trees will be constructed at GE Oil & Gas’ facility in Batam, Indonesia, which is in accord with the company’s commitment to increase local content and local capability for subsea projects in the region.

The deal includes GE’s Tree on Mudline (TOM) series and the SG1 wellhead system, suitable for shallow water operations using jack-up drilling rigs, and fully aligned to the needs of the operator.

The Bison, Iguana, and Gajah Puteri or also known as the BIGP fields are discovered gas fields on Premier’s operated Natuna Sea Block A and, according to Premier Oil, mark the next generation of developments to backfill the company’s existing Singapore and Indonesian contracts.

The FEED has been completed, and an investment decision on these projects is targeted for the first quarter of 2017. Together, these fields could increase gross deliverable reserves to Singapore and the local market by over 100 bcf.

Offshore Energy Today Staff

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