United Oil and Gas Plc, which holds the right to search for oil offshore Jamaica, gave notice to investors that it would announce a preferred drilling partner in weeks.
The UK-based explorer requires a partner to split the risk for drilling offshore, which it estimates at US$30 million.
United Oil holds oil and gas assets in Egypt, United Kingdom and a high-impact exploration licence in Jamaica. Its net worth, at US$27.7 million, is less than the cost to drill a test well, but its team of professionals are betting on the island.
“The farm-out campaign remains a key focus for United, as we seek to take this potentially transformational project forward into the next phase of the Licence. In order to do so, a commitment to drill a well will need to be made by end January 2024.
We have continued to engage with potential partners to participate alongside us in drilling this exploration well, and earlier in the year, a deadline for indicative offers had been set for the end of H1. We are encouraged by the number and quality of companies that are in the process of completing their evaluations, and as they have requested additional time, we have agreed to extend the deadline. Additional updates will be provided in due course.”
January 2024 is fast approaching. What constitutes a commitment to drill? How soon must a well be spudded?
Could Jamaica extend the deadline? Should they?
United Oil and Gas is “encouraged by the number and quality of companies that are in the process of completing their evaluations.” We’ll soon find out how serious that interest is.
For those following the Barbados Offshore Licensing Round, no updates have been posted by the Ministry of Energy and Business; nor has the BOE team received any feedback on our comprehensive bid 😉
Of course, the 3 Stabroek Block partners who are responsible for this production – Exxon (45%), Hess (30%), and CNOOC (25%) – are also doing quite well. If you are wondering about this curious mix of companies – a US supermajor, a large US independent, and a state-owned Chinese mega-company – this OilNow post explains what happened.
Initially, Exxon and Shell were 50/50 partners in the Stabroek Block. Shell thought the chances for success were slim and opted out a year before the world class Liza discovery (ouch!). After Shell departed, Exxon sent “at least 35 letters” to prospective partners and only Hess and CNOOC responded favorably (actually, it was Nexen, not CNOOC that responded). The Liza discovery followed and the rest is history.
Will exploration offshore Jamaica and Barbados also prove successful? Stay tuned.
Only 11 exploration wells have ever been drilled in the entire country (comprising an area of around 258,137 km2 including all the offshore areas), all between 1955 and 1982
Hydrocarbon shows were observed in all but one of these wells despite not having tested valid structures, as is evident on the latest data
Just 2 of the 11 wells were drilled offshore
Extensive onshore fieldwork and seep analysis studies have confirmed mature Eocene and Cretaceous oil-prone source rock potential, with migrated oil identified in onshore wells and outcrop samples. These include Late Cretaceous (Cenomanian-Turonian) aged organic shales exhibiting total organic carbon (TOC) up to 8% with maturity.
Modelling also suggests significant oil potential exists in mature Cretaceous source kitchens in both the Walton and Morant basins while shallower Palaeogene shales with TOCs up to 15% could also locally be deep enough to be mature.
An independent Prospective Resources Audit completed by Gaffney Cline & Associates in December 2020 estimates that just 11 of the total 21 prospects & leads defined to date contain a combined total unrisked mean prospective recoverable resources in excess of 2.4 Billion STOOIP (stock-tank oil initially in place). Of this, 406 MMbbls is attributable to the Colibri Prospect alone, with an upside of 966 MMbbls STOOIP.
United is offering a material interest and potential operatorship to suitably qualified parties in the license in return for a commitment to fund a well to test the Colibri Prospect before January 2026, which would fulfill the obligations for the current Second Exploration Period of the Licence.
Gaffney, Cline & Associates have audited the drill-ready target prospect with mean resources of 400 MMbbls
Standalone success on hitting the mean target is expected to achieve NPV10 of $2.5 billion at $60 oil
The test well cost is estimated to be $30 million and provides exposure to own a material interest in the entire license
The initial target is a carbonate platform and shows strong evidence of reservoir trap and intact seal, Cretaceous kitchen source and live oil seeps
Recent advanced seismic relative dispersion technical work provides further evidence of reservoir porosity and permeability, the presence of a seal, and additional reservoir potential
The License, formerly owned by Tullow, is well-supported by the Jamaican government with attractive fiscal terms
Note that the license covers 22,400 sq km, as compared to ~25 sq km for a typical US offshore lease block.
“In Jamaica, the farm-out of our high impact exploration licence with 2.4 billion barrels of unrisked mean prospective oil resource is picking up pace with a timetable for receipt of indicative offers due in Q2 2023.
In Jamaica, as part of the licence extension that was granted, technical studies that have provided additional positive support to the farm-out process have been completed
With extensive seismic data coverage, including 2,250 km2 of 3D data, numerous plays and prospects have already been identified and mapped across the area – leading to over 2.4 billion barrels unrisked mean prospective resources being assigned to the licence. The drill-ready, high-impact Colibri prospect alone contains mean prospective resources of 406 mmbbls.
The Colibri prospect is in 750 m of water, and according to this article, would be developed with a tenstion-leg platform if a commercial discovery is made.
United Oil & Gas is looking for partners to drill the promising Colibri prospect offshore Jamaica. United’s exploration license has been extended after the completion of Jamaica’s first 3-D seismic survey. The results were encouraging as indicated in the video below. High risk, high reward opportunity!
Bud's Offshore Energy (BOE) 