Cnooc’s Golden Eagle field declining faster than anticipated

Production from Cnooc’s Golden Eagle is “lower than expected”, the result of “higher than anticipated rates of decline”.

EnQuest (LON: ENQ), which farmed into the North Sea field in 2021, said in an operational update that it is working with the Chinese oil firm to “identify and implement mitigations”.

Despite the scale of falloff, the London-listed company reinforced that production efficiency at Golden Eagle remains strong at over 95% – year to October production was 6,542 barrels of oil equivalent per day (boepd)

A two well infill drilling campaign kicked off at the field, 70 miles north-east of Aberdeen, in September.

© Supplied by CNOOC

The first well did not locate reservoir-quality sands above oil water contact, EnQuest confirmed – it was subsequently plugged and abandoned.

Meanwhile, spudding of the second well has begun, but progress is “slower than expected”.

EnQuest completed its acquisition of Suncor’s 26.69% stake in Golden Eagle in 2021.

Magnus

Aside from the woes at Golden Eagle, the company delivered an upbeat operations update, confirming the successful completion of the North West Magnus infill well.

Since then, early rates from Magnus have been “strong”, with average Magnus production during October of about 17,000 boepd.

Accordingly, the group is progressing plans to drill a water injection well in the first quarter of 2023 to provide pressure support to the infill well.

For the ten months to the end of October, production at Magnus has averaged 11,493 boepd.

A planned annual shutdown of the field was completed in 24 days, with “all major scopes” executed.

The primary focus of the work was compressor maintenance activities, to underpin future improved production efficiency.

Additional modifications were also undertaken to allow for indigenous Magnus gas exports of up to 20 Million standard cubic feet per day (mmscfd).

Kraken

At Kraken, average gross production to October was 26,370 boepd, around the upper end of guidance.

The floating production, storage and offloading vessel continues to deliver “top quartile performance”, EnQuest said, with production efficiency of 92% and water injection efficiency of 93%.

© Supplied by EnQuest

Amjad Bseisu, EnQuest chief executive, said: “The Group has delivered good production performance from its operated assets since the beginning of the year and we expect full year production around the mid-point of our guidance range.

“During the fourth quarter, the Group successfully completed the North West Magnus well, which is delivering strong performance since completion.

“During the planned shutdown at Magnus we made modifications to enable additional gas production of up to 20 mmscfd. Further workover activities at Magnus and drilling activities at PM8/Seligi and Golden Eagle are ongoing.

“Building on our excellent operational performance and deleveraging during the first half of the year, we are on track to deliver on our 2022 targets.

“Supported by the successful refinancing of our capital structure, we continue to progress towards our net debt to EBITDA target of 0.5x, which will enable us to consider our broader capital allocation priorities, including potential returns to shareholders in the longer term.”