Ophir Energy is to invest $145million in a three year project to bring the fourth phase of a Thai asset.
The firm will plunge the money into the development of the Bualang Field in the Gulf of Thailand between now and 2020.
The Final Investment Decision was approved at Ophir’s AGM today.
The project is expected to deliver net asset value (NAV) of $50million, representing an unlevered internal rate of return (IRR) of 40plus %.
The development will consist of a 12 slot bridge-linked wellhead structure with additional power generation.
It will include the drilling of up to 14 wells and an expansion of the water disposal capacity on the Bravo platform.
ERC Equipoise, Ophir’s reserves auditors, have provided a letter of comfort to the board that forecasts that the development will convert 9.2mmbo of contingent resources to reserves.
First oil expected in the second half of 2018.
Through a combination of additional debt leverage and the Thai fiscal terms, the project is expected to start delivering cumulative positive cash flows from the start of 2019.
The Vantage Drilling Topaz Driller jack up rig is on location at the Bualuang field and has commenced operations on the 2017 infill drilling programme.
This programme consists of two development wells and one well targeting untested prospective resources in a near-field step-out location.
Abandoned well stock is to be recycled to target the three new locations with the goal of the development wells growing production by around 1,400 bopd.
The cost of these development wells will be c. US$12 million and is expected to add US$23 million to the NPV of the project and payback within 12 months. Production year to date from the field is averaging 8,100 bopd.
Nick Cooper, chief executive of Ophir Energy, said: “Bualuang is a reliable, low cost, cash generative asset. Phase 4 is a great opportunity to grow NAV per share through the monetisation of additional resource with quick paybacks and a healthy IRR.”
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