RE: Article...
January 11, 2005 1:09am
Europe Intelligence Wire
2004 was a good year for the Peak Group, with its reputation boosted by successful management of what became a five-well programme for Canadian North Sea newcomer Oilexco, whose share price rocketed on news of its commercially viable Moray Firth Brenda oil discovery.
Importantly, Peak secured a clutch of contracts that guarantee a record 2005 for the Scottish company, with the anticipated well count set to rocket.
All told, managing director Bob Lyons anticipates that up to 30 wells will be managed over the next 12 months, of which some 20 will be North Sea. This compares with a total of 10 in 2004.
Core work for 2005 includes a multi-well North Sea programme with US recent entrant Century (six to nine wells); the ongoing campaign with Oilexco, which has still to be finalised; work with ONGC of India out of Peak's Dubai office for four wells in Iran, and two wells scheduled for the Gulf of Thailand.
Eleven of the UK wells had been confirmed prior to the Christmas holiday, but it could be some time before others are signed up. On the agenda is a cocktail of exploration, appraisal and development wells.
For example, Century has an exploration well planned for the Central North Sea; otherwise, its Southern North Sea schedule will comprise appraisal and development activity. Burlington wants wells drilled in the Irish Sea, while Faroe Petroleum has a well pencilled in for west of Shetland, targeting a potential satellite to BP's Clair field. Confirmation of this is subject to the results of seismic reprocessing currently being carried out.
What is happening today with regard to the way in which more and more of the North Sea is passing into the hands of independents is precisely what Lyons predicted several years ago and is the raison d'etre for Peak being established.
Moreover, Lyons believes there are sufficient business opportunities in the North Sea for two and perhaps three well project management companies to compete shoulder to shoulder. Currently there are two - Peak and ADTR.
Newcomer energy independents like Century and Oilexco cannot afford to carry the huge well-related overheads that traditional North Sea players such as BP and Shell can handle. But the province can make economic sense if they engage with a specialist well management contractor like Peak which is capable of dovetailing a portfolio of wells on behalf such clients.
"I'm hopeful that we will establish a very stable market and that we become increasingly attractive because of our ability to create campaigns and offer slots which therefore have low mobilisation and start-up costs for companies wanting to do single wells," said Lyons.
"It's a sensible business model the cheapest way for such companies to drill wells. If we work with six or eight companies, the overheads are split. We can create what is effectively one large programme.
"While we will swap rigs, all our service contracts, like buying casing steel, will cover the whole programme. That makes us a powerful buyer which, in turn, can bring the cost of wells down considerably, though rig rates have risen quite a lot lately." Peak intends to run its 2005 North Sea programme with four rigs, two of which were already booked prior to the winter holiday. Basically, the intention is to work with two semi-submersibles and two jack-ups, as appropriate.
Turning to the overseas dimension, Lyons said Peak held a contract with Century to drill two US wells - one onshore Louisiana, the other in the swamp. The programme is subject to rig availability. Because the US market is so tight, the Century work has already suffered delays, but in the offing is the prospect of a further four-well deal.
"Century has engaged a British company because they like the process we use," said Lyons.
"The probabilistic, business-focused approach applied by Peak is what encouraged that company to use us here in the UK. They were so taken by the process we use that this was why they are using us in the US.
"This is an extremely valuable toehold in the US a very exciting prospect for us. If we're successful onshore, our hope is that we'll then be asked to do some offshore work in the Gulf of Mexico." Peak will also carry out work in West Africa following its debut offshore Gabon working for Vaalco and Sasol. This will comprise a mix of exploration and development activity, with two to four wells to be drilled offshore. The Aberdeen firm also has a well to drill for Dana off Mauritania - Petrel in block one.
"We're designing the well at the moment and looking at the options as to how we will drill it," said Lyons. " The base plan was for Woodside to make a rig slot available to Dana. We would look at an assignment of the slot for full services, take care of all the engineering and then go drill the well. However, there is currently a questionmark over rig availability and we are currently out to the market looking for another rig." The pressure is on to drill by Q2 as this is an obligation well with June set by Mauritania as the final deadline.
Lyons said Peak was also evaluating Middle East opportunities, having opened an office in Dubai during February, 2004.
"We're currently undertaking the project for ONGC; we're also supporting Sasol on some of its South Pars activity, and there's a lot of other potential work in the region," he added.