PGS Assumes Operatorshp of Varg Field

Effective August 1, 2002, PGS has assumed operatorship of Production License 038 in the North Sea. Norsk Hydro formally transferred its share of Production License 038 in the North Sea to PGS, with the effect that PGS now is operator of a producing oil field. The production in this license is presently between 13000 and 14000 barrels per day from the Varg field, through the Petrojarl Varg FPSO. PGS now holds effectively 70% of the license, with the Norwegian state effectively holding the remaining 30%. As consideration for the 70% share, PGS has assumed a portion of the field’s abandonment costs.

PGS has recently acquired a high technology 3D seismic survey over certain areas of the license in order to enhance the understanding of the license’s geology and prospectivity. The 3D survey is acquired with two different shooting directions. Processing is ongoing and the survey provides an important basis in maximizing the value of PL038, and discussions are currently ongoing regarding further development opportunities with several potential farm-in candidates.

The operatorship of the Varg field was assumed in agreement with Norsk Hydro in order to secure tail end production from the Varg field and possible tieback solution for Varg South. Carried interest in the field will be farmed out as license developments mature.


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