Oil and gas explorer Sterling Resources has said costs have overrun by 17% on the southern North Sea Breagh gas development.
The field, operated by German-owned RWE Dea UK, which has a 70% stake, has seen costs rise from £485million to £566million for its first phase of development.
Sterling, which has a 30% interest, said this was because of delays in pipeline work plus development drilling after the installation of the Breagh platform last year.
The firm also said an independent report had led to the estimate of full field proved and probable reserves on the field being cut by 11%, although first-phase proved and probable reserves increased by 4%.
Chief executive Mike Azancot said: “Our first material gas production, from Breagh, is now only a matter on months away. This is a turning point for the company, however, we remain focused on maximising the returns from Breagh.”
In its update, Sterling also said it may have to use some of a £10million overrun facility on a £95million loan from a consortium of banks for the first phase development of Breagh.
Drilling is due to start early next month with the Ensco 70 rig, Sterling said. First gas is expected in early July, with first sales in August. A second phase could see a second platform installed on the field or through subsea tie-backs, the firm said.