P2248

P2248 is a 28th Round licence located to the west of the depleted Esmond (Bunter Sandstone) gas field and Pegasus (Carboniferous) gas field which was discovered in 2014.  Cluff have identified a major early Carboniferous structure with stacked pay potential and 3 discrete opportunities within the Bunter Sandstone on block 43/11.  A Competent Persons Report completed by Xodus Group in October 2016 confirmed a combined P50 Prospective Resource of 1.74 TCF across the 4 opportunities.  Technical work aimed at further de-risking each drilling opportunity was completed during 2017 and has resulted in a significantly enhanced chance of success on each prospect over those reported in the CPR.

Please find a link to P2248 Competent Persons Report and Economic Feasibility Study here.

Block Details

 

Licence No: P2248 (Promote)
Quads: 43/11
Area: 240km2
Equity position: 100%
P50 Prospective Resource: 1.73 TCF

 

Cadence Prospect - Carboniferous

The Cadence prospect is located on a prolific Carboniferous fairway which includes a number of producing fields including Cavendish and Murdoch, recent discoveries such as Pegasus immediately to to the south-east and the Crosgan discovery to the north-west.

The prospect is a high relief, 3-way dip and fault sealed hanging wall trap with a maximum closure area of nearly 50km2 and contains stacked early Carboniferous fluvio-deltaic sandstones which occur throughout the Yoredale, Scremerston and Fell Sandstone formations.  Individual sandstone units from 10m to 100m thick are present throughout the early Carboniferous sequence and many are proven producers on adjacent blocks and elsewhere within the basin.

The target reservoir sandstones are interbedded with organic mudstones, shales and coals which are mature for hydrocarbon generation and act as both local source and intra-Carboniferous seals.

Early trap formation, relatively recent hydrocarbon charging and limited scope for post-charge reactivation of the bounding fault combined with fault seal analysis, which demonstrates relatively small fault throws can support hydrocarbon columns of several hundred metres, significantly de-risks this prospect and presents a compelling case for the upside volumes.

Recoverable resource estimates for the Cadence structure range from 228 BCF to 2,990 BCF with a Best Estimate (P50) of 929 BCF.  A high level well design has been developed for the prospect and well costs for testing the Cadence structure are budgeted at approximately £12M.

The potential of these prospects was independently assessed by Xodus Group and confirmed in a Competent Person’s Report published in October 2016. Please find a link to the Xodus CPR here.

Bunter Sandstone Prospects

The Bunter Sandstone is a regionally extensive reservoir, and historically has been a prolific producer, which fell out of favour following a number of dry holes drilled on now outdated 1980’s 2D seismic which could not be explained at the time.  The recent availability of regional scale 3D seismic surveys has gone a long way to explaining many of these early failures and also resulted in the identification of a number of new drilling opportunities on Bunter Sandstone prospects which have analogous seismic responses to successful Bunter gas fields.

Licence P2248 is located in a proximal location compared to the Esmond gas field to the east and the Bunter Sandstone interval displays significantly greater internal complexity than is typically expected with large scale fluvial channels cutting down into the underlying shales, consistent lateral pinch-outs of sand bodies and evidence for discrete, diachronous sand bodies being observed.  This depositional regime provides the opportunities for a range of stratigraphic trapping mechanisms in the Bunter Sandstone which simply could not be resolved on older 2D surveys.

The prospects range from primarily structural features to channel sands draped over a structural nose to a purely stratigraphic pinch-out.  Each prospect is supported by a characteristic amplitude response observed at both the Esmond field and the Furasta discovery located on adjacent blocks to the east and west respectively and initial AVO work supports the presence of high quality gas bearing sands within the prospects.

The key 3D seismic data set which covers all three prospects is currently being reprocessed to support further detailed AVO analysis.

Combined recoverable resource estimates for the 3 Bunter Sandstone prospects range from 252 BCF to 1,766 BCF with a Best Estimate (P50) of 806 BCF.  Basic well designs and high-level cost estimates suggest well costs of between £5M and £8M to test each Bunter Prospect.

The potential of these prospects was independently assessed by Xodus Group and confirmed in a Competent Person’s Report published in October 2016. Please find a link to the Xodus CPR here.

Resource Summary

Licence P2248 contains a number of significant prospects in the lower Carboniferous and Triassic Bunter Sandstones which have a combined P50 Prospective Resources of 1.73 TCF which is equivalent to approximately 300 million barrels of oil.

Net Prospective Resource (BCF)
Licence Ref: CLNR Equity Project ID PRMS Status P90/Low P50/Best Mean P10/High  Risk Factor % Revised Risk Factor %*
P2248 100% Cadence – Scremerston Prospect 59 165 206 410 18 26
Cadence –      Fell Sst Prospect 111 604 923 2175 9 16
Cadence – Camden Prospect 58 160 204 405 15 26
Bassett Prospect 36 128 153 303 29 37
Bathurst Prospect 119 275 317 571 18 18
Beckett Prospect 97 403 460 892 18 22

* Revised geological chance of success post 2017 work programme.

Economic Feasibility Study

As an extension to the Competent Person’s Report on P2248 published in October 2016, Xodus Group Limited were commissioned to review potential development scenarios and economic viability of two of the six identified prospects on CLNR licence P2248 in the Southern North Sea gas basin, based on well analogues.

The Scoping Study focussed on two lower risk prospects on Licence P2248, the CadenceScremerston Prospect and the Bassett Bunter Sandstone Prospect, which, when combined, represent just 17% of total P50 un-risked Prospective Resources detailed in the October 2016 Competent Persons’ Report and 12% of the Company’s total P50 prospective resources.

The economics of each prospect, based on a stand-alone development, were tested against numerous potential exploration outcomes and development scenarios and using a gas price profile based on UK NBP gas price futures forecasts (as of 7 March 2017) from 2017 to the end of 2021, with gas prices from 2022 onwards increasing at 2% per annum. The economic evaluation indicated highly positive NPV values for both prospects and even in the P90 (i.e. low side recoverable gas volumes) NPV positive outcomes are possible. The outputs of the economic modelling for a selected representative development scenario for each prospect are presented in the table below:

Prospect Formation Unrisked P50 Prospective Resources (BCF) Chance of Success Unrisked NPV10 (GBP£Millions) EMV (GBP£Millions)
    Low (P90) Mid (P50) High (P10) % Low (P90) Mid (P50) High (P10) Post-Drill Success EMV
Cadence Scremerston 59 165 410 18 12.7 47.6 285.8 86.6
Bassett Bunter 36 128 303 29 3.0 41.8 183.1 69

 The study indicated that other prospects on Licence P2248, which would be significantly derisked by exploration success, provide significant further possible upside to the economic cases presented below, but were not the focus of the current study. Additionally, it is expected that significant CAPEX and OPEX synergies could be realised if two or more prospects are developed as a cluster as opposed to a stand-alone development.

Cadence-Scremerston Highlights

• Modelled stand-alone development options included P90, P50 and P10 resource volumes, low and high CO2 cases, different export routings and varying production well performance outcomes using the nearby Breagh field as the key analogue.

• Mid-case NPV10 of £47.6 million for selected development case (P90 to P10 range of £12.7 million to £285.8 million).

• EMV of £86.6 million assuming a discovery results from the proposed exploration well.

• Cash flow positive after 18 months with a payback period of three years for the selected P50 development case.

• Assumes no contribution from the Cadence-Fell or Camden prospects which contain significant upside potential (P50 prospective resources of 764 BCF in aggregate) assuming exploration success.

Bassett Prospect Highlights

• Modelled development options included P90, P50 and P10 resource volumes, low and high CO2 cases, different export routings and varying production well performance outcomes using the nearby Esmond field as a primary analogue.

• Mid-case NPV10 of £41.8 million for selected development case (P90 to P10 range of £3.0 million to £183.1 million).

• EMV of £69.0 million assuming a discovery results from the proposed exploration well.

• Cash flow positive after 18 months with a payback period of less than three years for the selected P50 development case.

• Assumes no contribution from the Bathurst and Beckett prospects which contain significant upside potential (P50 prospective resources of 678 BCF in aggregate) assuming exploration success.

Please find a link to the Economic Feasibility Study here.

Farm-in Opportunity

Given our 100% equity position in this licence CLNR is actively looking to attract funding and / or an Operating partner to support the maturation of this asset.

For more information please download the Cadence Prospect – Stacked Early Carboniferous Reservoirs flyer.