Premier Oil suspends Sealion Phase 1
PREMIER Oil has taken the decision to suspend Sea Lion Phase 1, the company announced on Wednesday.
A press released noted this was to minimise ongoing spend, “in light of the current market conditions. Sea Lion Phase 1 is complete from a technical aspect and all of the work which has been done to date is being fully documented, so that the project an be reactivated once the macroeconomic outlook improves.”
It said a reduced team will continue to progress “government, commercial and financing matters including the transaction documentation with Navitas who remain committed to farming in for a 30% interest in the Sea Lion licences.”
With regard to the Navitas farm-in Sea Lion partner Rockhopper Exploration said on April 30 that, “despite the current oil price weakness, all parties remain committed to the finalisation of the definitive Navitas farm-in agreement.”
Rockhopper Exploration said that the farm-in will become effective when Navitas is approved as a licensee by the Falkland Islands Government, an approval that is expected in the third or fourth quarters of 2020, the company said.
FIG Director of Mineral Resources Stephen Luxton told Penguin News today: “The Falkland Islands Government notes Premier Oil’s recent announcement regarding the company suspending work on the Sea Lion Phase 1 development.
“FIG recognises that, in the present macroeconomic environment that has been created by the Covid-19 pandemic, it is not possible for oil companies to take an investment decision in a project of this magnitude due to the exceptional decline in the global oil price.
“Prior to the recent global difficulties, the Sea Lion project had reached an advanced level of maturity in most areas, with several key project approvals in progress. FIG and Premier will continue to work together to progress various regulatory matters over the coming months, so that the Sea Lion project can resume promptly once the global oil price environment has recovered.”
A material opportunity
Premier Oil farmed in to 60% of Rockhopper’s Exploration licence interests in the North Falklands Basin, including the Sea Lion discovery, in 2012. The transaction was completed in October 2012 and Premier assumed operatorship of the Sea Lion area development in November 2012.
Premier describes the Sea Lion project as a material opportunity for the Group, with around 530 million barrels (gross) to be developed over two phases.