The exploratory oil well planned for Broadford Bridge, near Billingshurst in West Sussex, is likely be drilled in spring 2015, according to information for investors.
The cost of drilling is estimated at $5m (£3.17m) and, under a deal with the UK government, the well would secure the future of two license areas for the operators. The well is expected to explore for conventional hydrocarbons but possibly also what are described as “other potentially productive formations”.
The information is in annual and quarterly reports issued by the American company, Magellan Petroleum, for the United States Securities and Exchange Commission. Magellan is a partner of Celtique Energie, the operator of the Broadford Bridge site.
In its report for the three months ending September 30th 2014, Magellan said it had been working with Celtique on plans to spud [the process of beginning to drill] what it called the Broadford Bridge-1 well. The company confirmed this would be the first exploratory well to be drilled in its central weald licenses.
The quarterly report said the process of obtaining regulatory and planning permissions was “substantially complete”. It added: “Spudding of the well is now planned for the second quarter of calendar year 2015”.
This is later than originally planned, the quarterly report stated. It blamed “weather-related concerns” for the delay. The company’s annual report for its last financial year had said drilling would start in the autumn or winter 2014.
The annual report also stated the cost of the Broadford Bridge-1 well was “currently estimated to be approximately $5.0 million”. According to the quarterly report, the cost to Magellan was $1.82m (about £1.16m).
Magellan said it may fund this from its existing cash balances but it was also “considering a potential partial or full farmout transaction”. This suggests Magellan may sell part or all of its interest in Broadford Bridge-1 to another company.
The quarterly report also confirmed the well would explore for conventional, and possibly unconventional, hydrocarbons.
“The Broadford Bridge-1 well is designed and permitted to test a conventional prospect in a Triassic-age formation. Celtique may also collect logs and cores, where appropriate, from other potentially productive formations”.
An earlier report for investors, issued in March 2014,gave more information on which geological formations would be targetted:
“A complete suite of logs and cores is planned to be collected from the Kimmeridge Clay and Liassic formations, which we believe will provide certain technical data, including thickness, oil maturity, formation pressure, and rock brittleness, to be able to assess the potential for unconventional development of these formations and in turn possibly attract partners to continue the development of theses licenses”.
The Broadford Bridge site, at Wood Barn Farm, Adversane Lane, is in the licence area PEDL 234. This is one of three licence areas Magellan co-owns with Celtique Energie, amounting to about 124,000 acres. The other licence areas are PEDL 231 and 243.
All three areas have drill or drop clauses which require the operators to drill an exploratory well by June 30th 2016 or lose the licence. According to the quarterly report, the Department for Energy and Climate Change has agreed that the well drilled at Broadford Bridge would satisfy the drill or drop clauses for both PEDL 234 and 243. If the well were drilled, this would allow these licenses to be extended for another three years.
“According to an agreement with the UK Department of Energy and Climate Change (“DECC”), this well [Broadford Bridge-1], which is located within the license area of PEDL 234, will satisfy the drilling obligations for both PEDLs 234 and 243, and extend the term of the licenses until June 2019.”
Magellan also said it had been continuing to try to get permission for “additional drilling locations” within its central weald licenses. It said it expected this would allow it to meet its drilling obligations for the other licence area by the June 2016 deadline.
- The quarterly report also highlighted another connection between Magellan and Celtique Energie. In the notes of the accounts, Magellan said it had paid $40,000 to Devises International Consulting Ltd for consultancy services during the three months ended September 30, 2014. Devizes International was formed in 2013 by geologist, Christopher Pullan, a director of Celtique Energie and, according to Bloomberg Business Week, one of its founders.
[Post updated on 23/12/14 with material from a Magellan report to investors from March 2014]