PERTH (miningweekly.com) – ASX-listed Metgasco has entered into an agreement with fellow listed Byron Energy to farm-in to the South Marsh Island block, in the Gulf of Mexico.
Metgasco will gain a 30% interest in the project through funding 40% of the cost of an initial test well to casing point, as well as certain leasehold acquisition costs.
The well will be drilled in mid October this year, subject to rig availability, and drilling is estimated to cost some $11-million, of which Metgasco will contribute $4.4-million.
The well will be drilled from an existing platform agreement, with Byron negotiating a platform use agreement with the operator of a nearby South Marsh Island area block.
The agreement, along with a production handling agreement, in anticipation of well success and prospective production from the Byron area block, will improve the economics of the project, and could save as much as $20-million and 12 to 15 months of development time in relation to the project, compared with the alternative of constructing a standalone production facility on the block.
The South Marsh Island prospect has a prospective resource of some 5.2-million barrels of oil and 13-billion cubic feet of gas.
“Metgasco is pleased to extend its already highly successful relationship with Byron Energy via farm-in to this high quality prospect,” said executive chairperson Alex Lang.
“We congratulate Byron on the successful negotiation of a highly advantageous drilling access and production development arrangement, which has the potential to materially enhance the project’s economics.”