Byron Energy Limited (ASX: BYE) today announced that it has purchased a production platform consisting of two decks, a jacket and production equipment from a private company for a total price of $US1.0 million.
In a separate announcement to ASX, the company provided an update on the reprocessing of seismic data over the South Marsh Island leases. The reprocessing project reportedly resulted in a seismic volume with a significant uplift in data quality over what the company felt was already an excellent dataset to work with. This now enables Byron to tie 523 wells in the project area with a consistent seismic dataset and evaluate both known accumulations of oil and gas and dry holes drilled by previous operators.
The purchase of the production platform is expected to deliver a cost saving of approximately US$4 million with ‘buy versus build’ and expedited first production cycle time is expected to be reduced by an estimated 6-9 months. However, the jacket would reportedly need modifications to accommodate the 130’ feet of water depth in the South Marsh Island area.
Maynard Smith, CEO of Byron, stated that that winning this facility again marks the ability of Byron’s US team to implement shareholder-friendly capital conservation initiatives. This topside structure is a rare find and provides flexibility on any of the company’s projects while significantly reducing capital needs and time to the first production.
While this structure could be used at any of Byron’s South Marsh Island leases and the deck package could be used at any of Byron’s Eugene Island leases, the company currently expects that it is likely to be used on SM58, assuming the future SM58 #1 well is a commercial discovery. The topside structure is expected to remain in the fabrication yard, requiring little further expenditure until the drilling of SM 58#1 well is concluded.
The company further intends to add well slots at the newly purchased facility in order to bring the total available well slots from six to nine. As per the company’s information, the entire facility will be painted before it is installed and most of the production equipment is in the condition to be utilised. Because the bulk of engineering design work is already done, engineering costs and design time will also be substantially lower, told Byron.
With respect to the South Marsh Island Area reprocessing project, Mr Smith stated that “Byron has mapped several new prospects on its recently acquired SM58 lease and are moving toward drilling of its first SM58 well later this year. This data is a powerful tool that will bring benefits to its company and shareholders for many, many years.”
On these dual announcements, market sentiments trend upwards which led Byron’s stock price to move up by 1.667%, closing at $0.305 on 9 May 2019. BYE last traded at a price to earnings multiple of 9.580x with a market capitalisation of $208.61 million.
Over the past 12 months, the stock has witnessed a negative price change of 26.83% despite a decent upside of 7.14% recorded in the past three months.
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