Tullow Oil Begins Production at Schooner 10 in the UK North Sea

Tullow Oil announces first production from the Schooner-10 well in the UK, an update on UK drilling activity and a new production strategy for Horne and Wren.


The Schooner-10 production well, the first of the Schooner-Ketch redevelopment program, commenced production through the Tullow-owned CMS infrastructure on May 16, 2006 at a stabilized rate of 22 mmscfd. Further well stimulation is under review. At the time of acquisition in March 2005, production rates from the combined fields were expected to decline to below 28 mmscfd within 12 months. Tullow's facilities optimization and well management programs have resulted in a sustained production rate of around 50 mmscfd and raised facilities uptime to over 98%. The addition of Schooner-10 will increase the production capability of Schooner and Ketch to approximately 70 mmscfd.

Further production enhancements for the Schooner field are being completed before the Ensco 101 rig moves to the Ketch field at the end of the month where it will drill three development wells -- two new horizontal wells and a sidetrack of an existing well. It will then return to Schooner to drill a further development well.

In addition to the ongoing redevelopment work, the Borgsten Dolphin semisub is scheduled to arrive at the end of May to drill the NW Schooner Extension appraisal well on the flank of the Schooner field. If successful, NW Schooner would be developed via a subsea tie-back to the Schooner platform.

Cygnus (Tullow 35%)

The Cygnus appraisal well (44/12-2) has been suspended, having encountered several gas-bearing reservoir zones and following a successful well test of the principal target, the Rotliegendes Lower Leman reservoir. The results of the well test, the well logs and the core analysis are now being evaluated to determine the commerciality of the discovery. This work is scheduled to be completed by the end of the year and if deemed to be a commercial project, first gas is anticipated in 2008.

K4 (Tullow 22.5%)

The K4 exploration well (44/23b-13), targeting a Carboniferous prospect analogous to that drilled by the K3 (Kelvin) discovery well in 2005, commenced drilling on April 26. The K4 well, adjacent to Tullow-owned CMS infrastructure, is currently at 10,158 ft and is expected to reach the total depth of 13,800 ft in mid-June.


Horne and Wren, Tullow's first UK offshore operated development, commenced production in July 2005 and has achieved sustained rates in excess of 100 mmscfd gross. However, with Winter/Summer UK gas price differentials reaching unprecedented levels, the decision has been taken to shut in the fields during the summer months of 2006 and 2007 to maximize production over the next two winter periods. This adds significant value to Tullow and contributes additional gas to the UK market during periods of peak winter demand.

Commenting today, Aidan Heavey, Chief Executive of Tullow said:

"Today's announcement clearly demonstrates the strength of Tullow's acreage position in the Southern North Sea. Over the last 12 months we have transformed the Schooner and Ketch assets, made a total of four exploration discoveries and completed Tullow's first operated offshore development. Our increasing control over our operations, allied to the ongoing strength and seasonality of UK Gas pricing, allows Tullow to optimize returns from assets such as Horne and Wren by managing production to meet periods of peak demand and pricing."

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