Premier takes a fresh look at old plays

• Premier's Exploration and Development Acreage [135536 bytes]

A change of management in 1995 led to adoption of a new strategy with three main threads: to look for low-cost entry into opportunity-rich proven basins; to develop its Asian gas portfolio; and to specialize in exploration of carbonate reservoirs and thrust belt zones.

Targets

Charles Jamieson, chief executive of Premier, told OGJ the company is well on the way to meet the 3-year targets it set at yearend 1995.

From yearend 1995 to yearend 1998 it aims to: double total net production to 60,000 b/d oil equivalent (boed); double its reserves base to 200 million bbl oil equivalent (BOE); increase its number of established business areas from two to six; and add 40 million BOE to reserves each year.

Jamieson said Premier's two established business areas are: Northwest Europe, where it has interests in U.K.'s Wytch Farm, Scott, and Fife fields; and Pakistan, where it has one of the best portfolios of a foreign company.

Since then, Premier has built a solid position in Indonesia, where it has an interest in the West Natuna Block A license group-which hopes to sell gas via pipeline to Singapore and Malaysia-Anoa and Kakap fields, and a number of exploration licenses.

Jamieson said the company is also developing interests in six other areas: Cuba, Tunisia, Albania, Myanmar, Australia, and India (see maps, p. 35).

Premier has 45,000 boed of net production now, said Jamieson, and this year intends to invest £80 million ($128 million), split roughly 50-50 between exploration and development.

New management style

Richard Haythornethwaite, Premier director, said the company has adopted a singular style of management: It employs good general managers at major sites, controlled through a clear set of local financial and production targets; and it has built a series of alliances to give it greater power than it might otherwise wield.

"For the alliances, we've found a group of companies with which we are genuinely culturally compatible," said Haythornethwaite. "They are hungry for success and tied in with win/win relationships."

For example, in exploration, Premier has an alliance with Institut Francais du Petrole (IFP), Paris, one of the world's largest geological research institutes.

For production, Premier has an alliance with Atlantic Power & Gas Ltd., Aberdeen, a company that usually operates oil and gas fields on a contract basis.

Premier is aware that the world is running out of hot new exploration plays, and so it concentrates on taking a fresh look at older plays, in search of opportunities to apply its own insights into geology.

"There are an amazing number of opportunities where people's understanding is that they are not attractive," said Haythornethwaite. "The industry moves as a herd-we operate to one side and find countries before them."

For example, Premier got into Pakistan in the late 1980s, said Haythorne- thwaite, "when Pakistan was seen as a pariah both politically and technically. Now it's desirable."

Cuba

In Cuba, Premier is operator of exploration licenses for Varadero West and Blocks 18 and 21 licenses.

In 1997, Premier will drill one well on Block 21.

Premier sees a number of 500 million bbl-plus prospects in eastern Cuba and hopes for further discoveries in Varadero West, which is near to existing finds.

"In critical areas we will be shooting seismic through a volcanic layer," said Haythornthwaite. "If this works, we could have an extraordinarily attractive play system, like Cusiana/Cupiagua in Colombia."

Myanmar

Premier has an interest in the Yetagun license operated by Texaco Inc., where first gas production is targeted for 1999 following a $600 million development.

"Myanmar is exciting for exploration, because a new play has opened up," said Haythornethwaite. "The Miocene layer west of Yetagun is untested but has lots of potential for gas. There are 10-15 prospects for gas of a trillion cu ft scale." Two of those prospects, G and A, are to be drilled next year.

On Mar. 13, Texaco and Yetagun partners, with Premier holding 25.75%, signed a gas sales agreement with Petroleum Authority of Thailand (PTT).

The agreement calls for commercial production of Yetagun to begin late in 1999 to early 2000, at a minimum rate of 200 MMcfd of gas for 15 years, together with 6,000 b/d of associated condensate.

Premier said the agreement also allows for production rates to be increased to 400 MMcfd and the life of the contract to be extended to 25 years.

Albania

In Albania, Premier has secured the Dumre exploration and Patos Marinze field licenses.

Patos Marinze, discovered in the 1920s, has produced low levels of oil and been "grossly underexplored."

Haythornethwaite said Patos Marinze had original oil in place of 2 billion bbl of heavy oil, of which 5% has been recovered.

For the last 2 years, Premier has been studying whether oil recovery can be improved through thermal techniques.

"On the technical side, the thermal project has some way to go," said Haythornethwaite, "but we see flow rates increasing 5-10 times, with production of as much as 100 b/d from individual wells."

Patos Marinze remaining reserves have recently been estimated at 70 million bbl of oil, but Premier reckons it can recover 100 million bbl of oil. About 2,000 wells have been used in development.

The Dumre license contains the Dumre and Bellshi prospects. Dumre will be explored first. A well drilled to 6,000 m by Premier has helped to validate the geological model, said Haythornethwaite. Dumre prospect is of the 300 million bbl size, he said, but it is a high risk area with complex geology.

"Again," said Haythornethwaite, "in Albania we got in early, and we have even helped the government to draft its petroleum code."

Pakistan

In Pakistan, Premier has a 9.5% stake in the producing Qadirpur field, which yields 350 bcf/year, and bought a 22.5% interest in Kadanwari field, which is under development.

The company is operator of Bolan, Petro, Kandra, Dumbar, and Ghauspur permits and intends to explore first in Bolan and Petro.

Haythornethwaite said Premier plans to drill two wells in Petro this year, in a trend that runs throughout the Middle Indus basin.

The same rock formation carries through to Bolan, he said, where two wells will be drilled in 1998.

Other exploration

In Indonesia's West Natuna block, said Haythornethwaite, there are 33 prospects, which could have reserves totaling 1.5-2 tcf of gas and 30 million bbl of oil.

Any developments could be tied back to platforms in Anoa and Kakup fields. This year, Premier plans to drill five to nine wells in West Natuna Block A.

In Tunisia, Premier is operator of the El Jem, Maatoug, and Djebel Ouest licenses, where Haythornethwaite reckons there are four potential plays.

The company has acquired seismic data over El Jem and is working with IFP on a review of carbonate structures in the area. One or two wells are due to be drilled in El Jem this year.

In Northwest Europe, Premier will be involved in up to nine nonoperated wells, proving up the area around U.K. Fife field and in U.K. Kyle and Chestnut prospects.

In Australian license interests, Premier will participate in 5-10 wells in the offshore Carnarvon basin.

"We expect to be involved in 20-30 wells this year in all," said Haythorne- thwaite. "This will give us an exposure to a potential 700 million BOE net for £40 million ($64 million).

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