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Panoro Energy scales back operations in Gabon

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Oilfield Technology,

Panoro Energy has said that controls on movements of personnel, subcontractors and equipment to and from Gabon, and the increasing global restriction on movement, is likely to affect the planned timing of the DTM-7H well and the subsequent firm exploration well. The major supplier contracts provide for certain termination rights under exceptional circumstances. As a precaution, the Dussafu joint venture (JV) has for the same reason also taken the decision not to exercise the options for additional exploration wells.

Further, in response to recent commodity volatility and price uncertainty, the Dussafu JV has decided to temporarily postpone the commencement of the Ruche Phase 1 Development process until conditions improve.

The revised capital spending programme for 2020 amounts to approximately US$13 million net to Panoro, of which about US$3 million was spent as at end of February. The downward revised programme represents a 40% reduction to the company’s previously announced net CAPEX programme of approximately US$21 million for Dussafu in 2020.

Dussafu daily operations continue to perform in line with expectations with four wells (DTM-2H, DTM-3H, DTM-4H and DTM-5H) producing into the FPSO BW Adolo at a current gross production rate of approximately 20 000 bpd. The DTM-6H well is nearing conclusion of its drilling and completion operations. This well is scheduled to be brought online by June.

Based on current assumptions, Dussafu gross production for 2020 is projected to be 16 000–18 500 bpd assuming the DTM-7H well is postponed until a later date. This represents a reduction of approximately only 10% in the production range previously guided. Operating costs per barrel are expected to be approximately US$15 -17/bbl, compared to US$21/bbl on average for 2019.

Tunisian production activities remain intact

The TPS assets are currently producing in excess of 4000 bpd gross, with the previously announced work over activities in the final stages of completion. Tunisia, like other jurisdictions, is also experiencing the effect of the global pandemic, in restricted movement of personnel and services. Based on Panoro’s current assessment, the expected production growth to 5000 bpd gross remains on track, albeit with some potential for delays due to these increasing restrictions. Panoro remains committed to its further Tunisian activities and will monitor the effects of the global pandemic on their planning.

Financial and hedging

Panoro held cash balances as at the end of February of US$27 million (including restricted cash held for the bank guarantee towards Sfax Offshore Exploration Permit). As previously announced, Panoro has a hedging position for approximately 25-30% of its 2020 production, and its lifting schedule is weighted towards 2H20. Break even for production operations is less than US$25/bbl and cost control measures are in place. As a result, when combined with the CAPEX reductions as detailed above, Panoro’s balance sheet remains strong despite the low oil price environment.

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