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Yme project on course for first oil in second half of 2020

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Oilfield Technology,

OKEA has said that the Yme offshore project in the Norwegian North Sea remains on schedule for first oil in 2H20. The company is to work with the operator, Repsol, and the other joint venture (JV) partners (LOTOS and KUFPEC) to understand and mitigate the impact that restrictions (particularly travel restrictions) caused by the Covid-19 pandemic may have on the project.

The company has put in place a series of measures designed to protect employees and to ensure full continuity on OKEA operated projects, particularly at the Draugen field.

The company has a significant cash reserve of NOK1.2 billion and the Draugen field, which provides a substantial proportion of the company’s revenues, has low lifting costs of less than US$20/bbl. The next OKEA Draugen lifting is scheduled for May and this has been hedged just below US$50/bbl.

The OKEA01 Bond was successfully refinanced and in 4Q19 and replaced by a new facility, OKEA03. This means that the company does not face any bond maturities until 2023 or refinancing requirements in the short-term and has enough cash available to withstand a sustained period of low oil prices. However, in a continuing low oil price scenario certain bond covenants may temporarily become in technical breach. The company is prepared to, and have the tools available to, take necessary actions going forward if required. Importantly, the company does not have any RBL facilities which could be at risk of redetermination.

In addition to this, the company has substantial flexibility to reduce expenditure through focused cost reduction measures, together with the deferral of non-essential activities into 2021 or beyond. The company will postpone all project sanction decisions, such as drilling or seismic programmes. Sanctioned plans will be cancelled where possible and in agreement with JV partners. These measures will result in reductions to previously planned exploration expenditure of around 90% for the rest of the year.

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