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Production in Bakken formation expected to drop by 170 thousand boe per day in 2020, says GlobalData

Following the expected cuts in capital expenditure (capex) for shale operators in the Bakken due to demand shock from the coronavirus (COVID-19) and supply shock from the Russia-Saudi price war;

Adrian Lara, Oil and Gas Analyst at GlobalData, a leading data and analytics company, offers his view:

“Whenever available, companies will try to focus on their best acreage but most operators have already squeezed their best land and so the room for improving well initial production (IP) rates might be limited. Moreover, Bakken operators need to make all their wells profitable, not only the new wells, and generate enough free cash flow to cover operating expenses.

“These legacy producing wells require different levels of oil price to recover their investment and cover expenses depending on when they were drilled. In particular, relatively recent drilled and completed wells, for instance wells brought to first production during the last two years, are very likely to still be in a period of recovering their investment and their required breakeven price is in average above US$46 per barrel (bbl).

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“GlobalData estimates that for key operators in Bakken, a reduction of 50% in the number of rigs brings down their capex an average of 40% and this translates into a drop of 36% in their remaining net present value (NPV). GlobalData’s modelling indicates a drop of around 170 thousand barrels of oil equivalent per day in total Bakken production by the end of 2020.

“Furthermore, as per GlobalData estimates, the average position full cycle breakeven oil price of top operators in Bakken is US$46 per bbl. The full cycle position is relevant since it takes into account wells brought into production during the last two years, which bring an important share of production and are arguably still recovering their investment. By contrast the remaining breakeven oil price is at an average of US$26 per bbl, which indicates that operators have become very efficient in keeping their operation economically robust to cover their ongoing expenses.”

About GlobalData

4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make timelier and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.

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Maka Central discovery needs at least 210 million boe recoverable resources to be economical, says GlobalData

The Maka Central discovery has the potential to bring more than US$50m in revenue per year to the Surinamese Government, if it sees similar success to Guyana’s Stabrook, according to leading data and analytics company GlobalData.

Gregory Bosunga, Oil and Gas Analyst at GlobalData, comments: “Due to a lack of onshore processing and export infrastructure in the Guyana-Suriname Basin, development through a floating production storage and offloading (FPSO) unit will be the most optimal option. Maka Central reservoirs are located at the same level as the nearby Stabroek play – around 400 feet - so it is reasonable to assume a potential of 300 million barrels of gross recoverable oil.

2017 04 20 114457“Assuming there will be similar development and operating costs to Liza Phase 1, to breakeven from the estimated total costs of US$7.2bn, Maka Central will need minimum recoverable resources of 213 million barrels of oil equivalent at oil prices of US$56 per barrel.”

Block 58 comprises 1.4 million acres and offers significant potential beyond the discovery at Maka Central. Seven distinct play types, and more than 50 prospects, have been identified. However, although initial indicators are encouraging, such expectation could be premature. A comprehensive exploratory program over this large block with further drilling and testing needs to be carried out to appraise the resources and productivity of the reservoirs.

Bosunga concludes: “It is far too early to know whether this new discovery by Apache and Total might eventually bring a similar positive financial impact for Suriname as the Stabroek block is expected to do for Guyana. Nonetheless, the initial indicators are encouraging and it is worth noticing that Apache has the ability to retain the entirety of Block 58 with no relinquishment requirements until June of 2026”

The Maka Central discovery is along the same geological cretaceous targets as recent discoveries in Guyana, in the Campanian and Santonian intervals. Block 58 in offshore Suriname can be interpreted as continuation of the Stabroek Block geological trend in Guyana. Estimations have been made assuming that Maka Central discovery will see similar success to Guyana’s Stabroek.

About GlobalData

4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.

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Uncertainty looms over oil and gas M&A deals landscape amidst coronavirus outbreak and drop in oil prices, says GlobalData

The recent coronavirus (COVID-19) outbreak is adding further woes for the oil and gas industry, which is already plagued by oversupply and declining prices. This is expected to affect the completion of announced and planned mergers and acquisitions (M&A) deals, according to GlobalData, a leading data and analytics company

GlobalData’s deals database identifies that a total of 262 M&A deals were announced in the global oil and gas sector during January 1, 2020 – March 15, 2020, which indicates a decline of 26% over the 354 deals announced during the same period in 2019. The corresponding deal value also declined by 15%.

2017 04 20 114457Oil prices have been falling with concerns around oversupply. The production race and price war between Saudi Arabia and Russia are also contributing to the decline. Moreover, on the back of canceled events and travel restrictions due to the COVID-19 outbreak, the demand for jet fuel, as well as other fuel types, has been declining -resulting in a further drop in oil prices.

The Organization of the Petroleum Exporting Countries (OPEC) also revised and reduced its 2020 global oil demand forecast due to the outbreak. The average price of crude oil, which stood at US$63.4 per barrel (b) in December 2019, fell to US$61.6/b in January 2020 and US$53.3/b in February 2020. Furthermore, according to OPEC, oil prices fell by more than 30% during the first ten days in March 2020.

With a slowdown in demand amidst the COVID-19 pandemic and the drop in oil prices, a cloud of uncertainty looms over several announced and planned M&A deals in the oil and gas sector.

Aurojyoti Bose, Lead Analyst at GlobalData, comments: “Arranging finance for pursuing deals may emerge as a challenge. Completion of some of these deals is likely to be delayed, while some may be called off.

“For instance, in January 2020, BCE-Mach III LLC entered an agreement to acquire assets of Alta Mesa Holdings. However, on March 10, 2020, BCE-Mach III said that completion of the transaction fell into doubt, as the US$320m financing from UBS fell apart over the COVID-19 epidemic and the drop in oil prices.”

  • Quotes are provided by Aurojyoti Bose, Lead Analyst at GlobalData
  • The information is based on GlobalData’s Financial Deals Database
  • This press release was written using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis conducted by GlobalData’s team of industry experts

About GlobalData

4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make timelier and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.

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Tendeka pens four-year zonal isolation contract in Malaysia

Independent global completions service company Tendeka has secured a four-year contract to supply its zonal isolation technologies across a leading operator’s Malaysian assets.

The contract was awarded through Tendeka’s partner in the region, Dialog Systems Sdn Bhd (DSSB), a wholly owned subsidiary of Dialog Group Bhd, one of Malaysia’s leading technical service providers in the oil, gas and petrochemical industries.

This is the third time Tendeka has won this contract, which first started in 2013. This latest extension, worth more than USD1million, will see the company carry out the work until 2023.

Keith Parrott is Tendeka’s South East Asia Area ManagerKeith Parrott is Tendeka’s South East Asia Area ManagerTendeka’s SwellRight swellable packers help reduce well construction costs, extend well life, and improve well integrity. The company’s swellable packers provide long-term stability and reliability required to isolate producing zones. The retrievable option has been designed to isolate the wellbore while enabling the easy removal of the entire assembly from the wellbore without any milling operations.

Keith Parrott, Tendeka’s South East Asia Area Manager, said: “We are proud to have secured this contract for a further four years, which is recognition of both our team and the technology.

“Our zonal isolation swellable and mechanical packer technologies are designed to prevent fluid communication between individual reservoir sections. These sustainable solutions are recognised around the world to help reduce costs and extend the life of wells.”

Tendeka also offers SwellRight Ultra Packer, a cost-effective solution for high pressure applications, providing the highest-pressure rating on the swellable market. Enabling operators to utilise smaller pup joints, the Ultra Packers can effectively reduce the amount of rubber element required for high pressure applications, for use in horizontal and vertical wells. 

About Tendeka

Tendeka is a global specialist in advanced completions, production solutions and sand management for the oil and gas industry.  From simple to complex well designs, the company has an extensive track record in enhancing productivity for clients’ reservoirs offshore and onshore. Tendeka invests in research and development, bringing to market disruptive technologies and offering solutions targeted to operators’ specific production challenges.

Established in 2009 and headquartered in Aberdeen, UK, Tendeka operates in strategically positioned bases, located at global energy hubs including the North Sea, Asia-Pacific, Middle East and USA.

To find out more, please visit: www.tendeka.com

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Unity secures multi-million-pound contract with Spirit Energy for well integrity services

Unity, Europe’s largest provider of well integrity technology, services and engineering solutions, has been awarded a three-year contract by Spirit Energy to maintain wellhead equipment across twelve platforms in the East Irish Sea, Southern North Sea and the Dutch sector of the North Sea. 

As part of the work-scope Unity will deliver surface wellhead and Xmas tree maintenance services offshore, covering around one hundred wells, as well as providing onshore equipment testing, repair, refurbishment and storage from its base in Great Yarmouth. The contract, worth an annual seven figure sum, has two additional two-year extension options. 

Gary Smart, Unity CEO commented: “Having previously worked with Spirit Energy to provide well integrity and technology solutions, we have a strong understanding of the company’s operations. We are thrilled to add this service agreement to our growing portfolio of offshore contracts, which now includes over half of all major North Sea operators. 

Spirit Energy’s Central Platform, located in Morecombe Bay, one of the assets to be supported by Unity. Spirit Energy’s Central Platform, located in Morecombe Bay, one of the assets to be supported by Unity.

“We are well placed to deliver an all-encompassing service to our clients through a workforce of highly experienced offshore technicians. Our team has exceptional knowledge of all OEM wellhead equipment which will add value throughout this project. Our own range of spare parts, rental assets, innovative technology and specialised engineered solutions also offer reassurance for rapid equipment availability and solving any integrity challenges which may arise.” 

Unity is currently developing additive manufactured wellhead components at its base in Aberdeen, to complement its maintenance and spare parts offering. These strong but lightweight products will be delivered to clients with significantly reduced cost and lead times. 

Mr Smart continued: “We believe that part of the reason we are a preferred supplier for many of our clients is not only the fast turnaround, competitive pricing and expertise within the company, but crucially, the additional value we can deliver through our own in-house product technology and engineering. We continue to invest in research and development to enhance this capability and are looking forward to introducing our additive manufactured components to the market later this year.” 

Unity, part of the FrontRow Energy Technology Group, employs more than 120 skilled personnel across its bases in Aberdeen and Great Yarmouth, UK and Esbjerg, Denmark. 

About Unity 

Unity is Europe’s largest provider of well integrity technology, services and engineering solutions for the global upstream oil and gas industry. The company collaborates with its clients to deliver long-term solutions which enhance performance and drive savings over the life of their wells. Unity combines: 

  • Integrity support services: a full range of wellhead inspection, maintenance and repair; equipment rental, refurbishment, upgrade and recertification. 
  • Engineered solutions: unique in-house designed solutions that remediate well and conductor integrity problems. 
  • Technology: innovative products and services that reduce operating costs, improve performance, extend well life and simplify abandonment. 

Unity, along with Pragma, Well-SENSE and ClearWELL are part of Aberdeen-based FrontRow Energy Technology Group. 

www.unitywell.com 

About FrontRow 

FrontRow Energy Technology Group is a dynamic upstream oil and gas services group focused on dramatic cost reduction through the application of innovative technologies and ways of working. FrontRow comprises a number of complementary businesses, with a collaborative work ethic, to find smarter and more efficient ways for its customers to manage and exploit their producing assets. FrontRow specialises in production enhancement, well intervention, flow assurance, well integrity, field life extension and well control. 

www.frontrow-energy.co.uk