- Byron Energy (BYE) plans to start a two-well drilling program at its South Marsh Island platform located offshore the US state of Louisiana in a couple of months
- The company says it has secured the use of the Enterprise Offshore Drilling 264 jack-up rig to drill the Rainbow Trout (G3) and Smoked Trout (G5) wells and is targeting a commencement of drilling in early April
- The total program will cost about $28.3 million and be funded through a combination of internally generated funds and oil revenue prepayments from an oil major
- Byron is finalising documentation for a $15.5 million prepayment facility that will provide short-term funding
- BYE shares eight per cent higher at 13.5 cents
Byron Energy (BYE) shares jumped after the company announced it was set to start a two-well drilling program in a couple of months at its South Marsh Island SM58 G platform project located offshore the US state of Louisiana in the Gulf of Mexico (GOM).
The company secured the use of the Enterprise Offshore Drilling 264 jack-up rig to drill the new Rainbow Trout (G3) and Smoked Trout (G5) oil and gas wells and was targeting a commencement of drilling in early April.
Byron said it had identified multiple opportunities that can be drilled from the nine-slot SM58 G platform.
The primary targets for the G3 and G5 wells lie in seismic amplitude supported attic positions up-dip to prior “water drive” supported production in each primary target sand as mapped using Byron’s reverse time migrated 3D seismic data.
The company estimated the two-well dry-hole costs at US$10.7 million (A$15.1 million) and combined completion costs at US$9.3 million (A$13.1 million) for a total program cost of US$20 million (A$28.3 million).
Byron said the work would be funded through a combination of internally generated funds and oil revenue prepayments from an oil major, the purchaser of Byron’s existing GOM oil production.
The company has also confirmed a three-year extension of its existing oil offtake agreement with its sole purchaser and hedge counterparty since inception.
Byron said it was looking to finalise documentation for a US$11 million (A$15.5 million) prepayment facility attached to future oil revenue for short-term funding purposes.
The prepayment will be largely secured by the existing forward sale agreement of 400
barrels of oil per day (bopd) through to the end of this year plus a small add-on of about 300 bopd during the January to April 2023 period.
According to the company, the arrangement leverages its existing forward sale agreement, provides access to accelerated cashflow and establishes a framework for what it believes could evolve into an attractive line of credit.
BYE shares were trading eight per cent higher at 13.5 cents at 1:28pm AEDT.