Longboat says Equinor gearing up for a spud as exploration activity in Norway picks up

Norwegian oil and gas giant Equinor will start drilling operations at the Egyptian Vulture well, located off Norway, in late August. This is the first of seven wells planned for the next 18 months by Longboat Energy following its farm-in deals with three separate operators.

Longboat Energy, established by the former management team of Faroe Petroleum, at the beginning of June 2021 reached an agreement with three separate companies to acquire an exploration drilling programme offshore Norway structured as three farm-in transactions.

At first, Longboat did not reveal the name of the operators but later in June, after successfully raising funds for the seven-well drilling programme, the company revealed Equinor, Spirit Energy, and Idemitsu as the farm-out partners.

In an update on Monday, Longboat said that Equinor will spud the Egyptian Vulture prospect, the first well from the seven-well program, in late August 2021, using the West Hercules semi-submersible drilling rig.

The well, located in the Norwegian Sea, is targeting gross mean prospective resources of 103mmboe with further potential upside to bring the total to 208mmboe. The Geological Chance of Success associated with this prospect is 25 per cent with the key risk being related to reservoir quality/thickness.

The well is expected to take up to four weeks to drill with a pre-carry net cost to Longboat of c.$5 million (c.$1m post-tax). Upon success, there is the potential to provide low-CO2 blending gas to the nearby Equinor-operated infrastructure (Åsgard) allowing for the possibility of rapid monetisation. Egyptian Vulture is an Upper Cretaceous turbidite play bounded within a regional graben located in the prolific Halten-Dønna Terrace.

According to Longboat, the seven-well drilling programme has the potential to create a net asset value of over $1 billion based on precedent transactions on the NCS for development assets.

The next well in the programme, operated by Vår Energi, is scheduled to start in mid-September and will target the Rodhette prospect (Longboat 20 per cent) using the deepwater Scarabeo 8 semi-submersible drilling rig. This is a proven Jurassic Play in the Hammerfest Basin in the Barents Sea with a potential 30km tie-back distance to the Goliat field for early potential monetisation.

Longboat currently expects to complete the acquisitions of licences announced in June before 30 September 2021 but notes that this remains subject to Norwegian government approvals.

The company also said it intends to capitalise on the momentum gained with the initial farm-ins and successful equity raise to pursue value accretive acquisitions in line with its strategy to build a full-cycle E&P company focused on the North Sea.

Helge Hammer, Chief Executive of Longboat, commented: “We are excited at the prospect of drilling our first exploration well and can now look forward to a busy period of almost continuous drilling and frequent value catalysts during the next 18 months with a combined upside value potential in excess of $1 billion.

“Exploration activity in Norway is picking up and during the first six months of 2021, a total of 17 exploration wells have been completed, resulting in eight discoveries. On Egyptian Vulture, we are partnering with one of the most successful explorers on the NCS and a successful well could add more than 15 million boe of net contingent resources with significant monetisation opportunities”.