Industry

Wressle production will “break even at $17.62/barrel” – operator

181024 Wressle UWOC medium

Egdon Resources’ Wressle well site in North Lincolnshire, subject of a public inquiry in November 2019. Photo: Used with the owner’s consent

Production from the Wressle oil site near Scunthorpe will break even at $17.62 a barrel, the operator, Egdon Resources, has said.

In an update, the company’s managing director, Mark Abbott, said:

“Our modelling shows that the Wressle development is economically robust at and below the current oil price and remains a core focus for the business with a current expectation of first oil in the second half of 2020.”

Long-term production at Wressle was granted permission after a protracted planning battle, including two public inquiries.

After the second hearing, a planning inspector gave the scheme the go-ahead on 17 January 2020.

Egdon said it was currently working on fulfilling conditions, finalising detailed designs for the site and tendering for materials, equipment and services.

The first work on site would be installing groundwater monitoring boreholes and establish baseline conditions.

This would be followed by reconfiguring the site and installing surfaces facilities. Sub-surface work on the well would then be carried and production was estimated to begin during the second half of this year.

The statement also confirmed that Egdon had submitted its application for costs of the appeal on Wressle to North Lincolnshire Council.

Egdon holds a 30% stake in the Wressle licences, PEDLs 180 and 182. Other investors are: Europa Oil and Gas (30%), Union Jack Oil (27.5%) and Humber Oil & Gas (12.5%).

In January 2020, Egdon said low commodity prices, as well as the moratorium on fracking, were a challenge to its future. Its accounts for the year to the end of July 2019 said:

“[the combination] represent a material uncertainty that may cast significant doubt upon the group’s ability to continue as a going concern.”

Also in January, Europa revealed that its future depended on production this year from Wressle. Without it, the company said it risked failing to meet commitments without issuing shares or selling assets.

Egdon has estimated its share of the oil reserves at Wressle at 0.35-2.11 million barrels. Union Jack Oil said gross oil production from Wressle was estimated at 500 barrels a day.

Updated 20/3/2020 to edit headline

6 replies »

  1. The statement from Egdon is quite different to the headline produced by DoD. But, details within an RNS need to be accurate, so I will go with that.

    If break even is $17.62/barrel, at current prices it would be BETTER than break even. hence the reason for the “robust” term.

    Better than break even is profitable.

    Professor McKay was spot on regarding arithmetic!

    However, break even and profit also depends upon volume-but that is a separate matter altogether. Estimated volume and achieved volume could be quite different-either way.

    Headlines can be fun.

    “Best goal scored”.

    George had scored a goal, or someone had scored a spectacular goal??? Always “best” to look at the context.

  2. hewes62

    The oil price will do what it will over coming weeks. Those who need to, will secure the oil companies for when this is over-especially USA. I see this as no different to industries such as the car industry or airlines. I expect Mr. Musk is standing in a queue already! Those playing with the current oil price, like Russia, well, good luck to them. Texas, on it’s own, has a larger economy than Russia, so USA will do what it wants, and needs to strategically, in terms of support, and such moves will disappear over time..

    Of course, in the short term, some without support will decide to put on ice, or delay, some projects. But projects with a break even price of $17.62 (Egdon) will be in a better place than those at $38 (Enquest). As the inspector said, replacing oil from elsewhere, and with some “elsewhere” shutting down, a few who are no good at arithmetic will still propose something different, but my arithmetic still shows if you start with 2 and than have 1 you have a smaller figure than you started with, especially if the one is much smaller than the two!

    No mischief intended, but that is my view.

  3. Martin

    Thanks.

    I wonder how the Thistle ( AKA the black pig ) decommissioning will pan out. BP and the government are on the hook for that, but I expect a Greek chorus of disapproval over the tax breaks for that, even though the tax payer has been suckling at the profits since 1978.

  4. hewes62

    I have always had mixed views regarding N.Sea decommissioning. If the sites are safely capped I see little reason to remove the other infrastructure. Maybe leave what can be left safely to create marine nurseries?

    There seems to be a veritable angling mecca in parts of the Gulf of Mexico, and wrecks attract and shelter fish and encourage fish to breed. There may be an environmental benefit from leaving decent chunks of infrastructure where it is.

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