Total Makes Splash in Irish Offshore
Wednesday 7 June 2017
Total has picked up an option to farm into deep-water acreage off Ireland where a closely-watched wildcat is due to spud within weeks.
The French supermajor has also agreed a firm deal to take a significant stake in another Providence Resources-operated licensing option off the country, with Total also to assume operatorship of that tract from the Irish independent.
The optional deal is for a 35% stake in frontier exploration licence 2/14, which sits in 2250 metres of water in the southern Porcupine basin off southwest Ireland.
Providence and partners Cairn Energy and Irish junior Sosina Exploration are gearing up to drill the 53/6-A wildcat on the licence, targeting the Druid and Drombeg prospects. Drilling with the Stena IceMAX is set to start at the end of June.
Total has the right to back into the licence within 60 business days of the well being completed - plugging and abandonment - in return for a payment of $27 million, divided between Providence and Sosina.
With Providence holding 56% of the licence and Sosina on 14%, the cash would be split $21.6 million and $5.4 million in Providence's favour.
The vast bulk of the $27 million - $20.25 million - would be due from Total within 10 business days of 6 June, with the remaining $6.75 million due within three business days of issuance of the P&A notice for the well.
UK independent Cairn Energy is also in the licence on 30%, through vehicle Capricorn.
Separately, Total has taken a 50% stake and operatorship in licensing option 16/27, also in the southern Porcupine basin. The acreage lies in 1300 metres of water some 150 kilometres off Ireland's southwest coast and holds the Paleocene Avalon prospect.
The acreage is currently held 80% by operator Providence and 20% by Sosina, but Cairn has also secured an option to take a 20% interest from the pair.
If all partners in the LO agree to convert it into an FEL, like FEL 2/14, then Total will pay 60% of the cost of drilling an exploration well, up to a gross cap of $42 million.
Cairn can exercise its option for 20% within 60 days of P&A on the wildcat on PEL 2/14. If LO 16/27 does move to an FEL, Cairn would then pay 24% of any exploration well, up to the same gross cap of $42 million.
If Cairn exercises the option, the relative stakes would be Total on 50%, Cairn on 20%, Providence on 24% and Sosina on 6%.
At FEL 2/14, Cairn only entered the licence in early March, snapping up a 30% stake from Providence to leave the operator on 56% and Sosina on 14%.
FEL 2/14 contains the Paleocene Druid and the Lower Cretaceous Drombeg exploration prospects, as well as the pre-Cretaceous Diablo prospect – although the last will not be evaluated through the first single vertical well.
The first two prospects have been assigned total cumulative in-place unrisked prospective (Pmean) resources of around 5.095 billion barrels of oil, with Druid at 3.18 billion, Drombeg at 1.915 billion.
Providence secured the high-specification, dual-derrick, harsh environment drillship Stena IceMAX at the end of November at a knock-down dayrate of $185,000.
Cairn is paying 45% of the cost of drilling the well, up to a gross cap of $42 million. Providence has the rig for a possible two-well campaign, so if the partners decide to drill another probe – appraisal well FEL 2/14 - Cairn will pay 40% of the cost up to a gross cap of $42 million and will also have the option to become operator.