Energean to drill exploration well at Karish North prospect

Eastern Mediterranean-focussed exploration and production company Energean Oil and Gas said on Monday that it has made the decision to drill an exploration well in the Karish North prospect, offshore Israel, with a planned spud date before the end of March 2019, subject to necessary approvals.

The FTSE 250 firm said the decision would exercise the first of seven optional wells included in the Stena Drilling contract.

It said the Karish North prospect was located within its Karish lease, and would be drilled immediately prior to the three-well development of the adjacent Karish Main field - the company's flagship gas development project.

Gross drilling costs were expected to be between $15m and $25m.

The independent competent persons report for the Karish North prospect estimated gross recoverable unrisked prospective resources of 33.5 BCM (1.2 Tcf, or circa 200 MMboe) of natural gas and 14 MMbbls of light oil.

Energean said the Karish lease was 100% owned-and-operated by Energean Israel, which is 70% owned by Energean.

The decision to drill the Karish North well was said by the board to be consistent with Energean's exploration strategy to target near-field prospects, where potential discoveries could be quickly and economically monetised.

It said the Karish FPSO was being built with gas production and processing capacity of eight BCMA.

Energean Israel had forward-sold 4.2 BCMA of currently-discovered gas volumes, leaving around 4 BCMA of excess FPSO capacity available for the potential tie-back of future discoveries.

The option to drill additional exploration wells at the end of the development well campaign remained open, the board explained.

Options for a second well included the Karish East prospect in the Karish lease, and Prospect 4 in the Block 12 exploration licence, which Energean secured at the end of 2017 following the First Israeli Offshore Bid Round.

“We view Karish North as an attractive near-field exploration opportunity offshore Israel that could deliver significant upside alongside our existing Karish development, for which we have already signed 12 gas contracts and secured 4.2 BCMA of supply over an average period of 16 years,” said Energean chief executive officer Mathios Rigas.

“The goal of the exploration work is to identify further easy-to-commercialise resources in the region.”