BW Energy revealed as buyer of two Borr rigs as Gabon development plan gets revamped

BW Energy has concluded on an alternative development plan for the Hibiscus/Ruche satellite field in the Dussafu license offshore Gabon, using a converted jack-up rig to reduce investments and time to first oil.

The previous plan involved constructing and installing a new wellhead platform.

As a result of its decision to use an alternative development plan, BW Energy said on Monday it has acquired two jack-up drilling rigs, the 2003-built sister-units Atla and Balder, from Borr Drilling.

BW Energy added it will pay a total of $14.5 million for the two units.

As reported last Wednesday, Borr Drilling entered into an agreement to sell its cold-stacked jack-up drilling rig Atla. However, at the time, Borr has not revealed the name of the operator.

In a fresh update on Monday, Borr confirmed it has entered into an agreement to sell its cold-stacked jack-up drilling rig, Balder, to BW Energy.

The completion of the sale is expected in the fourth quarter of 2020, and Borr will receive $4.5 million sale proceeds. The rigs will cease to trade in the drilling rig market.

“A jack-up conversion will enable us to reduce capital investments by about $100 million compared to our previous development plan”, said Carl Krogh Arnet, the CEO of BW Energy.

“We are benefitting from the availability of high-quality jack-up units at very attractive prices due to the current drilling market slump. By re-using facilities we will also achieve a substantial reduction in field development-related CO2 emissions compared to a newbuild platform”.

The seismic reprocessing carried out by BW Energy has indicated the potential for a substantial increase to the Greater Hibiscus oil-in-place volumes, making further developments in the Hibiscus/Ruche area highly likely.

“This development concept offers tangible financial, schedule and environmental benefits. We have consequently decided to secure a second jack-up at a very attractive price to prepare for the future development of the Dussafu license”, said Carl Krogh Arnet.

“Acquiring a sister unit will enable us to re-use the engineering and project plans for a second development with obvious synergies”.

Calculations show that redeployment and conversion projects offer 70%-80% reductions to greenhouse gas emissions compared to newly built assets due to reduced steel consumption and shorter yard stays.

Further tangible benefits are reduced installation cost as a jack-up can “self-install” after mobilisation to the field and no need for piling into the seabed for stability.

The new development plan is expected to lower the estimated cash-break even oil price for the Hibiscus/Ruche (phase 1 and 2) development to approximately $25 per barrel Brent.

With the planned increased production from Hibiscus/Ruche, the Dussafu license production cost, including the Tortue field, is expected to drop to approximately $11 per barrel.

A final decision to restart the Hibiscus/Ruche development is subject to a lifting of COVID-19 restrictions to allow for efficient project execution.

The initial FID approved for the Hibiscus/Ruche development was approved in the fourth quarter of 2019 with an estimated gross development cost of about $660 million for both phases and proven resources (2P) of gross 112 million barrels of recoverable oil.