Oil majors are rarely accused of being lavish these days.
Yet that is what Kelt Energy plc, London, claims in explaining its operating philosophy.
Kelt Director Paddy Spink illustrates his company's tightfisted approach with a tale of a visit to a major company's production installation in Gabon.
Kelt chartered a small helicopter for the visit. The Kelt team was to be chaperoned by the major's staff. But the major forbade employees to travel in single-engine aircraft. Kelt's men flew out to the field, while the major's team had to charter an expensive aircraft before they could follow.
COST CUTTING
Kelt's main business strategy since 1992 has been to buy unprofitable producing assets from majors and operate them at a profit after paring staff and operating costs to a minimum.
"When we take over a field we operate with 50% of the staff of a major and without a substantial number of expatriates," Spink said.
"Kelt is not afraid to make itself unpopular with other oil companies, contractors, or government departments. When we take over a producing asset, we immediately renegotiate suppliers' contracts which have become cozy."
Spink said Kelt does not cut comers on safety or environmental precautions because this would "...catch you out in the long run." Instead, Kelt does not overspecify equipment to extend its reliability and cuts preventive maintenance "Occasionally we lose a day's production from one platform or another," Spink said, "but total losses are not as high as you might expect."
In October 1992 Kelt took over the Gabon assets of Amoco Corp., including operatorship of offshore Gombe field, which is currently shut in. Kelt has drilled two wells and aims to reactivate Gombe within 2 years.
Kelt negotiated a "favorable" amendment to Gabon's Oguendjo field license to accelerate and increase recovery of costs and has maintained production levels in a field that was expected to enter rapid decline. Kelt is looking for new acquisitions in Gabon.
PRODUCTION PLANS
Kelt took over the Cameroon operations of Total SA with gross production of 3,000 b/d. Kelt says it has maintained production there beyond expectations when the deal was signed. Now Kelt plans to extend production in Moudi field and in the next 2 years to begin production of total estimated reserves of 5 million bbl from the offshore La Lobe, Londji, and Balanga concessions.
Last year Kelt took over operatorship of a number of producing fields in Colombia from Ste. Nationale Elf Aquitaine with gross production of 30,000 b/d. Kelt intends to double production by placing five more fields on stream this year. Another five will follow in 1996-97.
Spink said Kelt will continue to focus on persuading majors to sell it assets that are not profitable and yet provide no incentive to abandon.
Amoco receives a royalty from Kelt for production in Gabon. Spink claims Amoco now makes more money in Gabon than it did as an operator.
Copyright 1994 Oil & Gas Journal. All Rights Reserved.
