Infill drilling campaign off Malaysia almost done, but four more wells may be on the cards

AIM-listed and Singapore-headquartered oil and gas player Jadestone Energy is bringing its current infill drilling program offshore Malaysia to an end, with Velesto’s jack-up rig on track to finish drilling the remaining well this month. However, the company is now mulling over another four-well campaign within the field, thanks to the results from the soon-to-be-over drilling program.

NAGA 2 rig; Source: Velesto Energy

In August 2023, Jadestone took Velesto’s NAGA 2 jack-up drilling rig on contract, after it hired the rig for the East Belumut infill drilling campaign. The first well in this drilling program on the PM323 PSC was drilled and brought onstream in September 2023. It is currently producing at around 1,400 bbls/d.

While the third well was drilled and completed in late October 2023, testing at a gross rate of about 3,100 bbls/d and subsequently brought onstream, the fourth well in the program was also drilled and tested at a gross rate of approximately 1,700 bbls/d in recent days.

As a result, the three wells drilled to date in the 2023 drilling program are currently producing at a gross rate of around 6,200 bbls/d, significantly exceeding the pre-drill gross rate expectation for all four wells of 3,500 bbls/d. Consequently, gross PM323 production has reached about 8,800 bbls/d in recent days, or approximately 5,300 bbls/d net to Jadestone.

Furthermore, the Naga-2 rig will now complete the drilling of the second well in the program, which was temporarily suspended due to fluid losses. This well is expected to reach total depth in the second half of November 2023.

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According to Jadestone, the capex for the 2023 East Belumut drilling campaign is now estimated at $28 million net to the company, or approximately $7 million (net) more than pre-drill expectations, primarily due to the extension required to complete the drilling of the second infill well. The overall cost of the drilling campaign is expected to be fully recovered by 2Q 2024 due to the higher rates of production seen from the wells drilled to date.  

The East Belumut field is located in the PM 323 production sharing contract, which also contains the Chermingat and West Belumut fields. These fields have been developed with a wellhead platform connected to a central processing platform at the East Belumut field.

The produced gas is re-injected to maintain pressure support, and oil is exported via a pipeline to an onshore oil terminal. While Jadestone is the operator with a 60% interest, Petronas Carigali is its partner and holds the remaining 40% stake.

Paul Blakeley, Jadestone’s President and CEO, commented: “Production has strengthened recently, with the stabilization of Montara, strong growth from the successful Malaysia infill drilling campaign, and solid performance from all other producing assets. The planned diversification of the portfolio is working, providing greater resilience to our business, and the addition of Akatara production next year will further enhance this.

“Progress at Akatara remains on schedule and, at 83% complete, first gas has been substantially de-risked, with pre-commissioning of certain key systems expected to commence shortly. The drilling program at East Belumut has been very successful, supporting near-term growth, and the results provide encouragement for further drilling within the field with another four-well campaign already being considered.”

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Moreover, Jadestone expects to lift approximately 1.6 million barrels across November and December 2023, including around 650,000 barrels from the CWLH fields and about 450,000 barrels from Montara.