Houston — US Gulf of Mexico operator Talos Energy is ramping up its oil and gas drilling program in that arena, aided by recent small bolt-on purchases that even though in the early stages of evaluation and drilling appear to add value to the mid-sized company.
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In the company's Green Canyon area - one of three core areas in the Gulf - Talos intends to utilize its production facility at GC 18 to advantage with drilling that can be rapidly monetized, company CEO Tim Duncan said Thursday during a Q4 conference call.
"While we work to develop a drilling program to revitalize the asset itself ... we quickly pulled together multiple business development opportunities with our regional seismic that we can tie back to the [production] facility," Duncan said.
Company-wide, Talos, which became public last May when it acquired fellow Gulf player Stone Energy, produced 53,400 b/d of oil equivalent in Q4.
In September, Talos acquired Whistler Energy II, which included the GC 18 lease. At the time, GC 18 was producing about 1,900 boe/d gross, although to date it has produced over 100 million boe.
The $52 million acquisition also came with two other leases, Green Canyon 60 and Ewing Bank 988, and also the GC 18 production facility located in 750 feet of water, with capacity to handle 30,000 b/d of oil and 30,000 Mcf/d of gas.
At the time of acquisition, Talos said it had been high bidder last August in new federal leases that contained at least three prospects that if drilled and made discoveries, could be tied back (i.e., meaning hooked up) to the GC 18 platform.
One recent prospect, Bulleit, is 10 miles away from GC 18 and will be spudded with partner EnVen Energy around midyear. Talos will operate with a 57% stake.
Another is the Antrim discovery, also in the Green Canyon area, and situated in a Miocene subsalt reservoir about 30 miles southwest of the GC 18 facility. Antrim may be appraised with a new well as early as 2020, Duncan said.
ANTRIM COULD BE TIED BACK TO GC 18
If successful, the field may also be tied back to the GC 18 facility.
In another core area, Talos' Ram Powell production facility offers the same potential for multiple tiebacks. The facility is in Mississippi Canyon, which is northeast of Green Canyon. Talos' Pompano, Amberjack and Ram Powell fields represented 19,300 b/d of oil equivalent in Q4.
Shortly after Talos bought the Ram-Powell production facility from Shell, ExxonMobil and Anadarko Petroleum last April, privately held US Gulf operator LLOG Exploration said it would develop its Stonefly field as a subsea tieback to Ram-Powell.
Talos will receive a production handling tariff, which Duncan on Thursday said represents a "balanced approach" to acquiring mature deepwater assets.
Production facilities not only present "new drilling opportunities within the acquired resource base but also [the chance for] utilizing these assets as business development vehicles," he said.
In addition, Talos has agreed to participate in the Orlov subsea project, which will be spudded later this month by privately held Fieldwood Energy. Talos will have a 30% non-operated interest. If successful, Orlov will be tied back to Fieldwood's Bullwinkle producing platform, Duncan said.
Shell also once owned Bullwinkle but later sold its interest to another operator and eventually Fieldwood acquired the facility.
Of its acquisitions in recent months, Duncan said Talos' basic US strategy is buying production hubs and related fields and figuring out how to monetize them both short- and long-term.
"We might buy something like Green Canyon 18 where we may need a year, a year and a half, to put together a drilling program," he said. "[But then we ask] what can we do to complement the transaction in the near term?"
Talos also operates offshore Mexico, where in 2017 it made the first discovery by a private company in that country and one of the biggest Mexican finds ever - Zama, which holds as much as 2 billion barrels of oil.
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