EnQuest announced today it has managed to achieve further cost cuts on the Kraken oil field in the UK North Sea following a restructuring deal.
This is not the first time EnQuest manages to reduce the Kraken costs.
“[The Group] is now reducing its gross full cycle capital expenditure estimate for Kraken by approximately a further US$100 million, down to approximately US$2.5 billion, mainly as a result of better performance on drilling and subsea production systems,” it said in a statement.
North Sea Kraken Oil Field Saved by Restructuring
The company explained that the Kraken floating production and offloading storage (FPSO) unit is very close “to mechanical completion, with the focus now on pre-commissioning and commissioning activities. All four engines and boilers are mechanically complete.”
According to EnQuest’s statement, the latest cuts in the project investment reduce the company’s net capital expenditure for 2016 by a further US$50 million, “now down to between US$620 million and US$670 million”.
The project continues to be on track to achieve first oil in the first half of 2017, with the FPSO set for sail away in the second half of this year.
Restructuring Key for Kraken Development
In the meantime, Kraken has reached an agreement with its lenders on debt restructuring which comes as an essential step for the progress with the project.
Without restructuring, the company explained, low crude oil prices and the investment needed would mean the Group would not have enough resources to bring Kraken to first oil.
“We are very pleased to announce today a comprehensive package of measures to place EnQuest on a strong footing to deliver our Kraken development in H1-2017 and ensure that we are well placed to deliver value to our shareholders in the medium-term,” EnQuest Chairman, Jock Lennox, said.
The Kraken field is located at a depth of 1,300 metres (4,265 feet) and is estimated to contain approximately 147 million barrels of heavy crude oil in the 2P probable reserves category.
The field will be developed using an FPSO unit, to be supplied by Malaysia’s Bumi Armada.