The Ensign discovery is one of the largest undeveloped gas accumulations in the Southern North Sea with an estimated gas volume in place of between 300 and 400 billion cubic feet ('Bcf'). The vast majority of the recoverable volumes are believed to lie within Block 48/14 with the remainder in Block 48/15a. Ensign was discovered in 1986 by well 48/14-2 which tested at 15 million standard cubic feet per day ('MMscfpd'). Using the Noble Julie Robertson rig, currently under contract to Venture through to early 2007, the Company plans to drill a horizontal appraisal well during 2006 to further test reservoir deliverability rates, ahead of committing to a development programme. Assuming a successful appraisal well, production from the discovery could be brought onto production during 2007 or 2008.
The total gross consideration comprises an initial £9,750,000 payable in cash upon completion plus an additional cash payment of £1,500,000 on approval of the Field Development Plan and a further £2,000,000 cash payment on commencement of production from the Ensign discovery. In addition, a total gross production royalty of 7.5% on the portion of production attributed to Block 48/14 will be paid to the Block 48/14 vendors, following economic payback from a successful field development.
Commenting on the news, Mike Wagstaff, Chief Executive said:
'We are delighted to have acquired one of the largest undeveloped gas discoveries in the Southern North Sea and added further development inventory to our North Sea gas portfolio. This is a great example of operating companies working together to unlock the value of 'stranded' discoveries. With transaction activity stimulated by the DTI Fallow Process and our long-term rig contract allowing us to immediately add an appraisal well on Ensign into our 2006 drilling plans, we look forward to adding another near-term production stream. We will also have the opportunity to look at diversifying the export routes for our Southern North Sea production as there are a number of infrastructure options for Ensign gas in addition to the obvious route over the Venture operated Audrey infrastructure.'
The Ensign discovery has estimated gas initially in place ('GIIP') of between 300 and 400 Bcf with an estimated recovery factor of 30-50%, based on the performance seen at analogous fields.
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