Byron Energy (ASX: BYE) is on track to soon achieve first production from three offshore oil wells in the Gulf of Mexico, with plans to spud the final well next week.
The oil and gas explorer announced its F2 appraisal well, located in the offshore South Marshall Island 71 (SM71) block, would be completed for production from the B65 sand, one of four discrete hydrocarbon-bearing sands encountered in the well.
During drilling, the drill pipe became stuck below the bottom of the D5 sand. Consequently, Byron decided to case the well below the base of the B65 sand, and to accelerate drilling of a third well, F3, to target D5.
“Given the high quality and thickness of the D5 sand encountered in the F2 well and the fact that Byron has a one-time option to drill a second well under the existing Ensco drilling contract (at current day rates), it has been decided to drill SM71 F3 well immediately using the Ensco 68 rig, rather than releasing it,” the company stated.
Byron said its decision to drill F3 to target the D5 sand would minimise potential expenditures and optimise take point and angle considerations for both sand completions, as well as maximising production and cash flow.
Due to adding this third completion, initial production from the SM71 field is expected to be delayed by about a month, with output now anticipated to commence in early March.
“While [bringing forward the drilling of F3] delays production slightly, we think it is in the best interest of shareholders in the longer run, as it reduces the cost of drilling the F3 and also brings forward oil production from the third well,” Byron chief executive Maynard Smith said.
Byron operates the SM 71 lease in a 50/50 joint venture with fellow North America-focused oil and gas explorer Otto Energy (ASX: OEL).
Otto managing director Matthew Allen said the near completion of SM71’s drilling program and start of production would also provide Otto with the ability to continue expanding its portfolio in the Gulf of Mexico area.
“The ability to accelerate significant production and value through the production from two different sands in three development wells on the SM71 field will provide a long term and stable cashflow for Otto,” he said.