Senior Executives at Tullow Oil are smiling brightly after it was able to save a whopping US$70M on its exploration budget. According to the company’s Chief Financial Officer and Executive Director Les Wood, a US$150M CAPEX was put aside for exploration but it only had cause to spend US$80M for its three-well drilling programme offshore Guyana.
The official also disclosed during the firm’s most recent earnings call that the exploration campaign has been a decade in the making.
The CFO said, “We’re very well-positioned in this hotspot and we highly appreciate the government’s strong support for its rapidly expanding new oil industry. Our acreage covers the terraced continental slope, up-dip of the Liza discoveries, which derisked our Cretaceous turbidite plays, and the recent Hammerhead discovery derisks our tertiary turbidite plays. Should we be successful, the new frontier basin economics in shallow water supports small minimum commercial field sizes with high-value barrels.”
In the Orinduik block, of which it is the operator and a partner with Total and Eco Atlantic, Wood noted that they are drilling two operated wells this year at 60% equity.
Wood said, “At first, we’ll drill the Jethro prospect in a lower tertiary play like at Hammerhead. We’re targeting over 100 million barrels, deploying a drillship in 1,350 meters of water at a net cost of $28M. Success would have material follow-on potential in the Jethro area. We expect to announce the results from Jethro in the first half of August.”
With respect to the second well which is the Joe well, and follows on directly from Jethro, Wood said that the target is a 100 million barrel prospect and it will cost around US$11M. Wood said that it is not quite such a deep well and it will test the upper tertiary play. He noted that results will be ready by the fourth quarter.
With respect to the Kanuku block, in which it has a 37.5% interest, the official noted that an exploration well will be spud there in September. He said that Tullow is targeting the 200 million barrel Carapa prospect. Wood noted that the Carapa 1 tests a cretaceous feeder channel up-dip of Liza. It will be drilled using a jack-up in only 70 meters of water, and the net well cost is expected to be about US$20M.
“So, after applying our full geophysical and geological capabilities, these high-impact wildcats have a one in four to one in five chance of success, which hasn’t really changed since I guided that in February, last. However, what I can say is, we’re obviously a bit more excited now that the drilling is actually underway. So, let’s see,” the CFO concluded.