Oslo-listed oil and gas E&P player BW Energy has inked a sale and lease back agreement with Minsheng Financial Leasing Co (MSFL) for an offshore production facility, which was repurposed from a jack-up rig for work at a development project within the Dussafu license offshore Gabon.
The sale and lease back agreement with Minsheng Financial Leasing for the BW MaBoMo – former Hibiscus Alpha jack-up drilling rig, which was repurposed into an offshore production facility with 12 well slots – will realize gross sales proceeds of $150 million under a ten-year lease term with an option to repurchase the unit from the end of year seven.
The transaction is said to free up a net $110 million of liquidity to BW Energy, in line with the working interest in the license. These proceeds will be used to finance the execution of the firm’s growth strategy including the continuing development projects in Gabon.
Knut R. Sæthre , CFO of BW Energy, commented: “We are very pleased to have executed the lease financing with MSFL. It represents a new source of funding at an attractive capital cost and supports execution of our strategy for long-term value-creation.”
BW Energy has a 73.5% interest in the Dussafu Marine permit offshore Gabon while Panoro holds the remaining 17.5% participating interest. While the gross production in Gabon averaged approximately 24,840 bopd in 1Q 2024, it has averaged around 29,800 bopd in 2Q. According to Panoro, the uplift in output is attributable to the start-up of production at the Hibiscus South field where the DHBSM-1H production well was put onstream in March.
In line with this, the gross production at the Dussafu Marin permit is expected to reach 40,000 bopd once all wells in the current campaign are completed. At the Ruche field, the DRM-3H ST1 production well has been drilled and completed without incident, encountering good quality oil-saturated reservoir sands in the regionally prolific Gamba formation. The well will come online this quarter with a new conventional electrical submersible pump (ESP).
Furthermore, Borr Drilling’s Norve jack-up rig has embarked on drilling operations on the DHBSM-2P pilot well to test a possible northeastern extension of the Hibiscus South field. In the event of a successful outcome, Panoro explains that a production well will be drilled into this extension, or the top-hole section of the pilot hole will be utilized to drill a production well in the main Hibiscus area.
John Hamilton , CEO of Panoro, commented: “We are encouraged by the good recent production performance at Dussafu, where continued drilling success further extends the block’s long history of delivering positive subsurface results. The sale and lease back agreement executed by the operator will result in a material cash inflow for Panoro which will enhance our development, including our ability to deliver shareholder returns, reduce bank borrowings, and opportunistically capitalise on growth opportunities.”
Moreover, Panoro underlines that three out of the four wells drilled to date at the Hibiscus field remain in production, two of these are producing on ESP with “encouraging performance” under adjusted operating parameters, and one is producing under natural flow without an ESP. The fourth well will be worked over in the current campaign after which production from the well will be reinstated.
Located about 20 kilometers northwest of the Tortue field, BW Energy’s Hibiscus/Ruche development project targets the Hibiscus and Ruche fields in Gabon. Initially, the project entails drilling up to six horizontal production wells in a 12-well phased program, which will be connected to a production facility. Panoro confirms that the production at the Tortue field is stable with the additional gas lift capacity installed and commissioned in July 2023 continuing to support production from all six wells.
The oil produced at Hibiscus/Ruche is transported by pipeline to the FPSO BW Adolo for processing and storage before being offloaded to export tankers. A planned annual three-week FPSO shutdown is slated to occur in May.