Jack Up Rig DrillingDoc, thanks for reminding me of this option.
I went back to my notes and Ian did mention it as a clear alternative to drilling a step=out well.
The 2012 deviated well.......drilled at a 75 deg angle from an onshore pad....was 2.8 km long.
The large rig was brought in from Houston, costing $3.4 million to mobilize.
Drilling time was estimated at 45 days at a cost of $150,000 per day.
Total drilling and development costs were estimated at $16 to $18 million
There are more than a dozen offshore gas field in this basin, so jack up rigs would be available locally.
What about total well costs ?
The Springhill reservoir is at 1600 m and in very shallow water less than 0.5 km from the original onshore drilling pad.
My research has shown that 300 ft jack-up rig currently costs about $100,000 per day.
I use $125,000 per day just to be on the safe side.
At 1600 m, drilling time will be about 25 days, perhaps a bit less as vertical drilling is much simpler.
Drilling costs per well would be about $3 million.
Testing and completion will cost another $1 million.
Mobilization costs should be modest, say $1.5 million, given that there are quite a few jack-up rigs in use in that basin area.
Pipeline costs to the processing gas processing plant ...less than 0.5 km.....should be no more than $1.5 million.
An unmanned production rig will be needed to produce the well.
I have yet to fully research this, but $5 million might be reasonable.
Add it all up and total drilling costs are estimated to be about $12 millioin.
Jack up rigs are essentially mobile barges, so getting to the second and third wells can be done quite quickly..less than a week.
That is, for a total of about $35 million, the use of jack up rigs should be able to drill and complete 3 wells in a period of 6 months to 8 months.
These wells would be able deliver about 6000 boepd.
This reservoir is estimated to contain between 14 mmboe and 18mmboe, which means an RLI of about 8 years, with exploration upside.
These wells in combinatioin, would qualify for the $7.50 per mmcf incentive program, now available.
Combined with liquids, the average per boe would be about $50 per boe.
That will produce about $110 million US per year in gross sales, with cash flows easily above $60 million US.
Lets assume a 50/50 JV, with RPT fully carried for drilling and development costs.
Thats $30 million US per year in cash flows that would justify a market cap of about $200 million or about $8 per share/.
The onshore concessions plus the cash flows from the gas processing plant would be incremental to this.
The current gas processing plant is fully utilized.
Given that there are several large offshore gas discoveries ( 30 to 100 km offshore ) under devlopment and that FV offshore production will require a 50 % increase in gas processing volumes ( unless RPT displaces one of its current offshore customers..which is very unlikley ) at some point an expansion of the gas plant will be needed.
Unless, RPT is fully taken out, by one of the offshore gas producers of which 3 are its customers.