ST. HELIER, JERSEY, 21st AUGUST 2014
FlowStream Commodities Ltd (“FlowStream”) is pleased to announce that it has agreed to acquire, through a wholly owned subsidiary, a stream from Gemini Oil & Gas Fund II, L.P. (“Gemini”) in relation to the Breagh gas field in the North Sea.
Gemini provided funding to Sterling Resources (UK) plc (“Sterling”) in 2007 for key appraisal wells on the Breagh gas field.
Breagh Gas Field Overview
The Breagh gas field, located in UKCS Blocks 42/12a and 42/13a, approximately 100 km east of Teesside, is one of the largest recent natural gas discoveries in the UK Southern North Sea with year-end 2013 2P gross reserves, as disclosed by Sterling, of 596 billion cubic feet.
Production commenced in October 2013. Gas is processed at the Teesside Gas Processing Plant and sold into the UK National Transmission System. RWE Dea UK SNS Limited (“RWE Dea”) operates the field holding a 70% interest, with Sterling retaining the remaining 30%. In addition to gas, the field also produces some condensate.
Recent Success on Breagh
In June 2014, well A07 was hydraulically stimulated and production tested. The well was production tested at a stabilized rate of 32 million standard cubic feet per day (“MMscfd”) (100% basis) at the planned initial operating conditions of the well. This performance represented an estimated two to three-fold increase in production rates over what might have been expected if the well had been completed with the standard completion used in the Breagh gas field. Well AO7 was subsequently brought on production on 7th August 2014 as the seventh producing well.
In August 2014, Sterling announced that well A08 had encountered four gas-bearing sand intervals within Zone 1, the main productive reservoir interval in the field. Preliminary analysis indicated total net pay of 265 feet measured depth or 112 vertical feet, which is the largest yet encountered in a Breagh well. Hydraulic stimulation will, according to Sterling, be undertaken on two of the four zones and the well is expected to start production in Q4 2014.
With the addition of production from A07 and A08, the field is forecast by Sterling to average 119 MMscfd for the second half of 2014, with a Sterling-predicted 2014 year-end exit rate of 135 MMscfd.
Future Development Upside
The drilling of two additional wells (A09 and A10) and possibly two sidetracks and/or hydraulic stimulations on existing wells are being considered for a drilling programme commencing in the third quarter of 2015. These wells are expected to start production in the first half of 2016.
RWE Dea and Sterling continue to work on Phase 2 of the Breagh development, which is expected to include the installation of a second fixed platform to the south east of Breagh A.
Jan Laubjerg, Chief Executive Officer of FlowStream, commented:
“We are delighted to mark our entrance into the UK North Sea with the acquisition of an existing stream over the Breagh gas field. The stream, which is structured in the form of a loan, played an important role in developing the Breagh gas field and highlights the relevance streaming can play in developing quality assets. The recent A07 and A08 well results indicate significant upside potential in the field and we are hopeful next year’s wells A09 and A10 will replicate this success. Further out we will be looking forward to the implementation of Phase 2 of the Breagh gas field.”
|FlowStream Commodities||Jan Laubjerg
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Notes to Editors
FlowStream Commodities is a streaming and royalty company focused on the oil & gas sector. FlowStream provides upfront cash for oil & gas companies and in return receives an oil and/or gas stream on a specific licence, lease or field. FlowStream also acquires existing streams and royalties in the oil & gas sector. FlowStream, with the support of its shareholders, which include KKR, Global Gate Capital and Anglo Pacific Group, intends to grow and diversify its portfolio of streams and royalties by sourcing primarily development and producing assets on a worldwide basis. For more information, please visit flowstreamcommodities.com