Talon sinks its teeth into fourth North Sea asset
North Sea oil and gas group, Talon Petroleum Ltd (ASX:TPD) has been offered a 50% interest in a licence over Blocks 12/26a and 12/27a in the North Sea via the UK 31st Offshore Licensing Round.
Talon undertook some company transforming initiatives in the March quarter as it entered into a binding heads of agreement for the purchase of all of the shares in EnCounter Oil Ltd.
The transaction provided the company with 100% ownership of two recently awarded, high-impact exploration licences in Skymoos and Rocket.
The newly awarded licence is the fourth UK North Sea asset acquired by Talon since the company embarked on its UK North Sea strategy in mid-2018.
The acquisition also provided additional benefits with Talon gaining access to a significant technical database and a highly-experienced UK North Sea management team with previous exploration success.
That technical team includes Graham Dorè and Paul Young who importantly also have an intimate knowledge of the licences offered.
Discussing these advantages and the strategic importance of the blocks in terms of the company’s broader strategy, Talon managing director, Matt Worner said, “We are extremely pleased to add another highly prospective licence to the Talon portfolio.
“This new licence includes the Vantage Prospect, which was identified by Talon’s technical team, Graham Dorè and Paul Young.
‘’The award of this licence shows we are delivering with our strategy to capture low-cost, high upside drilling targets via the regularly held UK Licensing Round process.’’
Further licences in pipeline and farmout imminent
Talon has recently applied for another licence in the 31st Supplemental Round and will shortly commence its consideration of licence areas proposed to be available in the 32nd Seaward Licensing Round, for which bids are due in late 2019.
In relation to the company’s established assets, Worner said “Additionally, we have started the farmout process for our Rocket and Skymoos prospects and we have received encouraging interest at this early stage.”
The new licence contains the Vantage Prospect, an Upper Jurassic stratigraphic trap updip of a known oil discovery well located within the licence area and contains a best estimate prospective resource of 44 million barrels of oil (mmbo).
Based on normal risking methodology used in the oil and gas industry, an estimated probability of commercial success for the Vantage Prospect, after all technical work has been completed, is expected to be in a range between 20% and 30%.
Interestingly, Talon jointly applied for the licence with Geoscience Services Limited (GSL), a company of which Dorè and Young are directors.
The bid for the licence was made prior to the company entering into the transaction with EnCounter Oil Limited, which brought Dorè and Young to the Talon team.
Building an impressive portfolio of assets
In addition to the newly awarded licence, Talon’s portfolio now includes a 10% participating interest in the Curlew-A discovery (Licence P2396) which contains 2C contingent resource of 45mmbo.
The company also has a 100% participating interest in two licences with a combined best estimate resource of 134 million barrels of oil equivalent (mmboe).
These are the Skymoos (licence P2363) and Rocket prospects (licence P2392), the locations of which can be seen below, with the Vantage prospect lying to the west of Skymoos.
Work program commitments for the initial two-year phase of the licences include poststack processing of 500 square kilometres of existing 3D seismic data and the acquisition of 150 line kilometres of existing 2D seismic data.
Management expects its share of the costs based on its 50% interest is approximately $60,000.