PeterGray wrote:'Lincoln Crestal' well (205/26b-14)
o Well to be plugged and abandoned by 22 June 2020, since the GWA partners have been unable to obtain an extension to the terms of the suspension consent or to obtain the other consents required to tie the well back to the Aoka Mizu FPSO
There's probably more to this story than what's being told here.
I agree, that's one of the issues that stuck out to me. Why are they having difficulty getting consents for the tie back? Surely they would have looked into what was likely required before they started planning for a tie back a year or more ago?
I'm not clear what the OGA looks at in these cases, but could it be that they reckoned it was only marginally commercial, and didn't want a tie back that wouldn't get much use. They want more proof of the field before agreeing? As you say, it certainly suits Spirit and HUR to be able postpone that capex for now at least.
Overall, I'm happy that they seem to be convinced they do have a viable model to explain the water, and they have certainly been able to produce at 20k. I look forward to more detail at the CMD shortly
A tieback such as this is in essence a (limited) field development authorization. The words / terminology will vary from country to country, but national authorities typical ask for all of the following to be demonstrated:
1 - maintenance of technical integrity through life, plus;
2 - maintenance of flow assurance through life, plus;
3 - capital adequacy & provision to properly retrieve the flowlines etc & plug & abandon the well at end of life (aka tidy up neatly), plus;
4 - demonstration that this is a reasonable commercial risk that it would be in the national interest to take over the field life.
Personally I can see potential issues with all of those, it is a very low PI for such a long tie back, and the commercial case is weak, and the combination (plus perhaps Spirits reluctance) is what tipped the decision against the tie back. Which straw broke the camel's back is not necessarily important.
On your other point they had to plan ahead for a tie back in order to be ready, and they were taking the view that at least one of the three 2019 horizontals drilled in LinWar would be suitable for tie back so that was a reasonable risk back then, with the fallback of using the tieback kit on a Lancaster producer. It turns out that the fallback is being brought into play. Let's hope that works as intended !
I will read the rest later, day job now. It is obvious that they are very delicately trying to stay out of the bondholders' hands .........