Byron sets Hercules’ rig in motion to spud Gulf of Mexico well
- Exploration & Production
Byron Energy, the operator of several blocks in the Gulf of Mexico, has mobilised Hercules Offshore’s drilling rig Hercules 205 to the SM-6 #2 well location in the U.S. Gulf of Mexico.
The rig was recently released by its previous operator, Renaissance, and it will operate for Byron under a dayrate between $49,000 and $51,000.
According to Otto Energy, a partner in the project, the rig was mobilized on Thursday and the move is expected to take one day. The well is expected to spud about 6 days after mobilisation, Otto said.
Once on location, Otto added, the rig will install new 30” conductor guides on the existing 72” caisson, drive the 30” conductor pipe and then start drilling the SM-6 #2 well.
The SM-6 #2 well is the first well to be drilled as part of Otto’s farm-in transaction with Byron announced in December 2015. The SMI-6 lease is part of a portfolio of low cost, high chance of success, conventional oil and gas opportunities located both onshore and offshore the Gulf of Mexico, which Otto has the option to participate in as part of the transaction.
In order to earn a 50% working interest (equal to a 40.625% revenue interest) in the SMI-6 Lease, Otto will contribute 66.67% of the costs of the well (estimated at $5.3 million net to Otto). Any costs above this amount in respect of the SM-6 #2 well and all future expenditure on the license will be in accordance with Otto and Byron’s participating interest (Otto 50%).
Otto’s Managing Director, Matthew Allen said: “We are very pleased to have commenced operations in respect of the SM-6 #2 well. The well location is situated in shallow water and surrounded by existing infrastructure.
“In the success case, the well will be completed for production with development by way of low-cost tie in, meaning that the project is economically robust even in the current low oil price environment. With production likely to commence around mid-2017, any improvement in oil price conditions will yield significant further value.”