Afren considering "strategic options" for Kurdistan project as resources revised lower

Oil and gas group Afren said it is looking at its “strategic options” for its 60% interest in the Barda Rash field, after analysis of the Kurdistan project showed a “material reduction” in reserve estimates.

“Overall, the reservoirs have not performed according to previous expectations and the approved field development plan,” Afren said.

An updated ‘competent person’s report’ (CPR) at Barda Rash has essentially eliminated all of the gross proven and probable (known as 2P) reserves of 190m barrels, and has revised gross contingent (2C) resources from 1,243m barrels to just 250m barrels.

The wells have produced “higher water cuts” than expected, while operations have been hit by a number of challenges.

The group could potentially produce from these reservoirs but that would need “significant” capital expenditure and would better suit another company with a different strategic focus, it said.

Furthermore, the estimated presence of light oil accumulations from the deeper Triassic Kurra Chine reservoirs have a high level of associated hydrogen sulphide, which would require substantial spending to develop.

Interim chief executive Toby Hayward said the company is “naturally disappointed” with the CPR “and will now consider our strategic options for Barda Rash”.

“Meanwhile, we will continue to focus on our core portfolio in Africa and allocate capital to our highest cash return projects.”