Independent Oil & Gas PLC, London, and farmin partner CalEnergy Resources Ltd. expect gas production to start in July 2021 from the first phase of their six-field Core Project in the southern UK North Sea.
Independent has completed a farmout, agreed last July, to CalEnergy of 50% of its southern North Sea assets, except for its Harvey licenses (OGJ Online, Sept. 26, 2019). At completion of the deal, the companies made the final investment decision to proceed with first-phase Core development.
The farmout includes the idle, 90-km Thames Pipeline, which has a capacity of 550 MMcfd of gas, and associated reception facilities at the Bacton Terminal on the coast of Norfolk, UK. The system of concrete-coated 24-in. pipe is to be recommissioned and extended.
The Core Project targets peak gross production of 146 MMcfd of natural gas from Blythe, Elgood, Southwark, Nailsworth, Elland, and Goddard fields.
Independent receives £40 million as initial consideration and CalEnergy’s £60 million carry of up to 80% of its first-phase development costs. CalEnergy will carry second-phase development up to £65 million.
Independent will pay CalEnergy a royalty of 20.2% of its net revenue from first-phase fields up to £91 million over field life. It also will receive an effective royalty interest amounting to £0.50/Mcf on CalEnergy’s 50% share of production from parts of Goddard field after 70 bcf has been produced, up to £9.75 million.
CalEnergy has the option to acquire 50% of the Harvey licenses within 3 months of completion of the Harvey appraisal well 48/24b-6, results of which are being analyzed. It’s owned by Berkshire Hathaway Energy Co., Des Moines.