Tullow Begins Gas Production from Horne & Wren
Tullow reports that natural gas production from Horne & Wren, Tullow's first operated development in the UK, commenced on June 9, 2005 and reached a stabilized flow rate of 60 mmscfd. The flow rate will be ramped up to the plateau rate of 90 mmscfd over the coming days.
The development, a 50:50 joint venture between Tullow and Centrica, comprises two horizontal wells, a normally unmanned installation and a pipeline to the Thames platform in which Tullow has a 67% interest. The gas is processed at Thames and compressed for export to the Tullow-operated Bacton Terminal.
Tullow first acquired minority interests in the Horne & Wren discoveries from BP in 2001 and subsequently entered into a series of transactions that resulted in Tullow operating the development with a 50% interest. The fast-track development was initiated following project sanction in June 2004 and the Field Development Plan was approved by the DTI in October 2004.
Production from the Horne & Wren wells brings the throughput of the Thames infrastructure to over 190 mmscfd, a four fold increase since early 2004. This increase further reduces the unit operating cost of this regional hub and extends the life of the Thames facility, thereby enhancing the value of Tullow's other interests in the Thames Area fields.
OPAL GAS DISCOVERY (FORMERLY WEST BOULTON)
The Opal exploration well (43/25a-2W), operated by Gaz de France Britain, has successfully encountered gas bearing reservoir sands in the targeted Carboniferous section. Tullow currently has a 46% interest in the discovery although this may revert to the original equity of 30% if certain back-in rights are exercised.
The discovery, located within Tullow's Caister Murdoch System ("CMS") core area was suspended on June 9, 2005. Information obtained from the well will now be integrated with existing data to determine the extent of the accumulation and to complete pre-development studies. In the event of a positive outcome to these studies, the co-venturers plan to re-use the suspended well. The tie back options include the nearby CMS infrastructure, in which Tullow and Gaz de France Britain have a non-operated interest.
COMPLETION OF THE SALE OF THE ALBA AND CALEDONIA ASSETS TO ITOCHU
On June 8, 2005 Tullow completed the sale of two subsidiaries holding minority interests in the Alba and Caledonia oil fields in the Central North Sea to Itochu Corporation for a headline consideration of $112 million. This transaction was first announced on April 12, 2005.
Commenting today, Aidan Heavey, Chief Executive of Tullow said:
"The achievement of first gas from Horne & Wren and the Opal discovery are further evidence of the excellent progress we are making in our Southern North Sea gas business. In conjunction with a very strong UK gas market, these events will create significant value for Tullow and enhance our position within the CMS and Thames/Hewett core areas. We look forward to further success in this region."
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