ENERGY: Energean’s Israeli fields remain on track for first gas in 2021

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Greece’s Energean Oil and Gas says its Israel fields Karish and Tanin remain on track to deliver first gas into the Israeli domestic market in 1Q 2021.

Its chief executive Mathios Rigas said: "2018 was a very successful year for Energean. We increased revenues by 56% while reducing cost of production 29%, made significant progress on our development projects and converted significant volumes of resources into reserves.”

He added: “Karish and Tanin remains on track for first gas in 1Q 2021 and we have secured $12.9 bln of future revenues through 4.6 bcm/yr of contracted gas sales, firmly underpinning the project’s economics.”

Rigas said there would be positive momentum in 2019, which will include the drilling of at least six new wells across “our acreage in Israel and Greece”, targeting significant increases in reserves, resources and production.

“In Israel we continue to see increasing demand for our gas and are aiming to fill the 3.4 bcm/yr of spare capacity in our FPSO in the medium term. We continue to target value-enhancing opportunities in the Mediterranean area and aim to match the growth achieved over the last decade.” 

The next visible milestone will be mobilisation of the Stena Drillship in February ahead of spudding of Karish North in March. 

The Greek company’s 2019 drilling programme will target up to 2.3 Tcf of gross prospective gas resources and is well aligned with its exploration strategy to target resources that can be quickly, economically and safely monetised. 

Karish North will directly target 1.3 Tcf of gas and 16 million barrels of liquids (gross) with a volume-weighted geological chance of success of 69%.

Energean believes that success at Karish North could have a positive read-across to Karish East; technical analysis indicates that the fault between Karish North and Karish East does not form a barrier and, therefore, does not limit the extent or flow of any hydrocarbons.

Karish East contains gross prospective resources of 0.5 Tcf of gas and 7.5 million barrels of liquids with a volume-weighted geological probability of success of 70%. Karish North will also provide important read-across information for the Karish Main structure.

Drilling of the three Karish Main development wells will immediately follow Karish North and completion is expected by year-end 2019. 

Energean has a further six options available on the Stena drilling contract at a favourable rig rate. NSAI has identified additional gross prospective resources of 5 Tcf of gas and 62 million bbls across the Tanin lease and five exploration blocks.

It is evaluating all potential opportunities to monetise the value of the remaining options.

Following signature of the I.P.M. Beer Tuvia gas sales agreement on 2 January, Energean has now signed GSPAs for 4.6 BCM/yr from its Karish and Tanin FPSO2, which is being built with a total capacity of 8 BCM/yr.

Energean targets filling the remaining 3.4 BCM/yr of FPSO spare capacity in the medium term, which it believes will deliver “attractive incremental economics”.

The IPM agreement has added between 0.265 and 0.38 BCM/yr of gas sales, currently expected to commence in approximately 2024, contingent on results of the 2019 drilling programme.

Energean estimates that the agreement will contribute revenues of approximately $0.9 bln over the life of the contract, bringing total secured revenues to $12.9 billion over the life of the fields.

It continues to see strong incremental demand for its gas while also trying to add Cyprus among its customers for Israeli gas.

During 2019, Energean expects to deliver average production of between 5,000 and 6,000 bopd.

The range is driven by assumptions on performance of the Epsilon Extended Reach Well, timing and performance of 2019 wells, workovers, and historic performance / decline of the existing well stock. Energean continues to target production of more than 10,000 bopd in 2021.