New Assessment of Resources in South Lokichar Shows 25% lower Than Reported

A new full assessment of all the exploration and appraisal data, Tullow estimates that the South Lokichar basin contains the following recoverable resources 560mmbo 2C down from 766mmbo reported earlier by DeGolyer and MacNaughton Canada Limited (DMCL).The best 3C recoverable resources have also been downplayed to 1,230 mmbo from 1630mmbo from an overall discovered STOIIP of up to 4 billion barrels.

Tullow Oil estimates that the additional remaining conventional undrilled prospect inventory of the basin is approximately 230 mmbo risked mean recoverable, not including further potential in tight-oil plays in the future.

The assessment follows data collected from a total of 21 appraisal wells have been drilled in the South Lokichar basin as well as extended well tests, water injection tests, well interference tests and water-flood trials conducted to date

A total of 21 appraisal wells have been drilled in the South Lokichar basin. Tullow has also conducted extended well tests, water injection tests, well interference tests and water-flood trials, all of which have proved invaluable for planning the development of the oil fields. The appraisal campaign has firmed up the Group’s resource estimates and improved Tullow’s understanding of the subsurface at the key producing fields.

Following the assessment of the South Lokichar resources the operator Tullow Oil has proposed that the Amosing and Ngamia fields should be developed as the Foundation Stage of the South Lokichar development which would include a 60,000 to 80,000 bopd Central Processing Facility (CPF) and an export pipeline to Lamu.

This approach Tullow says brings significant benefits as it enables an early FID of the Amosing and Ngamia fields taking full advantage of the current low-cost environment for both the field and infrastructure development and provides the best opportunity to deliver First Oil in a timeline that meets the Government of Kenya (GoK) expectations. The installed infrastructure from this initial phase can then be utilised for the optimisation of the remaining South Lokichar oil fields, allowing the incremental development of these fields to be completed at a lower unit cost post-First Oil.

The Foundation Stage is currently planned to involve an initial 210 wells through 18 well pads at Ngamia and 70 wells through seven well pads at Amosing. This stage will target volumes of around 210 mmbo of the total estimated 2C resources of 560 mmbo and a plateau rate of 60,000 to 80,000 bopd. The incremental development of the remaining 2C resources and the significant upside potential is expected to increase plateau production to 100,000 bopd or greater.

It is anticipated that the FEED and baseline Environmental and Social Impact Assessments (ESIA) for the foundation development will commence in the second quarter of 2018, with FID targeted for 2019 and First Oil for 2021/22. The company expects to use $2.9 billion in the Foundation Stage including $1.8 billion is investment in the upstream and $1.1 billion is for the pipeline.

Tullow adds that together with its Joint Venture Partners have re-engaged with representatives of the Government of Kenya on the overall approach and timelines for progressing the development following the extended election period.

On the early oil pilot scheme Tullow says that initial injectivity testing has started at Ngamia-11 and oil production and water injection facilities are being constructed in the field ready to commence production/injection in the first quarter of 2018. Oil produced is being initially stored until all necessary consents and approvals are granted and work is completed for the transfer of crude oil to Mombasa by road as earlier indicated.