Hartshead Resources says it has received “high interest” from parties keen to partner up on a pair of UK gas fields.
A farm-out process for Anning and Somerville is currently ongoing, with the initial phase of the partial divestment procedure now wrapped up.
There was interest from “a number of potential industry partners”, with “a sub-set” now having moved onto the “further due diligence and negotiations” stage.
Australian-headquartered Hartshead (ASX:HHR) is aiming to secure an associate and funding for the development of the Phase I Anning and Somerville gas fields.
It says it “remains confident” of a successful outcome to the farm-out process, given the “high level of interest” to date.
Uncertainty “inevitably remains” though with respect to ultimately bringing another party on board, subject to continuing discussions and negotiations.
Hartshead said in its quarterly report that it hopes to successfully conclude talks by the end of March.
Work going on in the background
Work to progress the Phase I development of Anning and Somerville is currently ongoing, with Petrofac securing a platform and subsea FEED contract last year.
The energy services giant will also draw up a detailed design of a 25-mile pipeline, which will connect the fields to a link between Shell’s Corvette and Leman Alpha platforms.
Petrofac (LON: PFC) also completed a £500,000 pre-FEED study in 2022, in which it carried out offshore construction support and export route analysis.
Chief executive of Hartshead, Chris Lewis said: “Progress on Phase I Field Development continues apace with ever growing momentum. Engineering studies for the selected platform and pipeline development concepts have been awarded, which, once completed, will form the technical basis for tendering for the platform construction and pipeline laying contracts.
“The partial divestment process has achieved a significant milestone, with the initial phase complete and the process now entering into late-stage due diligence and negotiations. Discussions with potential partners continue and I look forward to providing a further update in the near future.
“We continue our work with Shell with the engineering study for the offtake route ongoing as we continue to further define the various engineering aspects of the tie-in and the offshore and onshore facilities. I would like to thank Petrofac and Shell for their continued support in this work.”
Big spend on the cards
Anning and Somerville are both located in the Southern North Sea in Licence P2607, which also contains the Hodgkin and Lovelace plays.
Hartshead is currently the sole owner and operator of the permit, estimated to hold 2P reserves of 301.5 billion cubic feet of gas (around 52 million barrels of oil equivalent).
© Supplied by HartsheadTo achieve first gas from Anning and Somerville, Hartshead is expected to splash out £110 million between 2023 and 2024, according to analysis from Barclay Pearce Capital (BPC).
That is based on the assumption a partner farms-in to 50% of the phase one project, with total capex forecasted to be nearer to £350m.
Spend is likely to take place between 2023 and 2026, meaning Hartshead can secure windfall tax relief of £160m.
Coming ashore at Bacton
Current plans have Anning and Somerville being produced via six wells, hooked up to two normally unmanned platform installations.
Both installations will be tied back to third party host infrastructure and facilities for onward gas transportation to the Bacton Gas Terminal, Norfolk.
© Supplied by ShellHartshead is looking to add to its UK portfolio as well, and confirmed last year it would take part in the North Sea Transition Authority’s 33rd exploration licensing round.
Mr Lewis added: “Having the UK’s 33rd Licensing Round launched on the 7th of October with a little over three months to prepare and submit applications was an interesting start to the Quarter.
“Although such tight timelines and a particularly busy festive period were unexpected, as ever, the Hartshead Team put their collective shoulders to the task and we are very pleased with what has been submitted.
“Once again, the Team has my gratitude for all their hard work, particularly over the holiday period.”
Recommended for you
