Two companies join forces to secure marginal field projects
UK-based Marginal Field Development Company (MFDevCo) has executed a collaboration agreement with the drilling contractor COSL Drilling Pan Pacific Limited (CDPL) to work together to secure marginal field projects.
NU-Oil informed on Thursday that MFDevCo, the company in which NU-Oil holds a 50 percent interest, has entered into a collaboration agreement with COSL Drilling Pan Pacific Limited (CDPL) with the objective of securing projects more cost-effectively, earlier, and with less upfront capital.
CDPL, headquartered in Singapore, operates a fleet of eight jack-up drilling rigs and is the international branch of COSL, the integrated oilfield services provider in the offshore China market with core business segments including geophysical services, drilling services, well services, marine support and transportation services.
The collaboration agreement allows MFDevCo to work on a ‘one-stop shop’ basis with CPDL, as a partner in the Marginal Field Delivery Consortium, to access the entire range of services and increase efficiencies, with CDPL offering commercial terms that should expedite MFDevCo’s entry into projects and facilitate earlier development.
According to NU-Oil, specific details of the commercial arrangement will be agreed on a project by project basis, to allow project-specific timelines and conditions to be accounted for. However, in general terms, CDPL has committed to offering delayed invoice and payment terms to MFDevCo which, in certain circumstances and on terms mutually agreed, will have the effect of deferring a significant portion of the cost of the rig until after hydrocarbon production has started.
In other respects, the arrangement will reflect normal industry terms, but the commitment made by CDPL will allow MFDevCo in turn to make commitments on certain work required to secure access to projects at an earlier stage than would otherwise be possible and having raised significantly less capital prior to the beginning.
In return for the commitment it is making, CDPL will have the exclusive first option to provide drilling and other core COSL services on projects that MFDevCo enters into, provided that there is no conflict with existing members of the MFD Consortium and that acceptable terms structured as outlined above can be agreed. This therefore forms the basis for a long-term working relationship with the potential for increasing efficiencies in service provision and working practices going forward.
In addition, MFDevCo and CDPL have agreed to investigate the possibility of additional services, potentially including fabrication, being provided, through CDPL, by sister companies, where such services can be offered on competitive terms and no conflict exists with other members of the MFD Consortium.
Alison Pegram, Managing Director of MFDevCo, commented, “Signing this agreement with CDPL is a major milestone for us as we move to complete negotiations on our initial target projects. The marginal field projects that we are focusing on are particularly well suited to this type of commercial arrangement, as there is no exploration risk, and CDPL, in this case, are therefore able to defer receipt of certain elements of their revenues with confidence.”
Dr. Nigel Burton, CEO of Nu-Oil and Gas Plc, commented, “We are delighted that MFDevCo has entered into this agreement with CDPL. It further demonstrates to operators MFDevCo’s capability to create the complete solution which is necessary to secure projects.”