ARKANSAS, Oct 9 (Future Headlines)- Talon Energy Ltd and partner Strike Energy Ltd have initiated the stabilized export of commissioning gas from the Walyering gas field into the Parmelia Gas Pipeline under an arrangement with Santos WA Energy Ltd, starting on October 1. They sold a gross total of 52 terajoules (TJ) of gas.
Strike Energy holds a 55% stake in the JV and is the operator, while Talon Energy holds a 45% stake. This partnership allows them to jointly develop and produce from the Walyering field. The JV has a gas supply agreement with Santos WA Energy Ltd for the supply of 36.5 petajoules (PJ) of gas over a five-year period. The supply is on a firm, take-or-pay basis at 20 TJ per day, with provisions for additional gas supply on an ‘as available basis.’
Condensate production has been in line with forecast rates, averaging around 200 barrels per day since the commencement of firm gas supply. With gas supply achieving an uptime rate of more than 97%, the JV partners plan to increase the field’s production rate gradually to reach its nameplate capacity of 33 TJ per day in the coming weeks.
The Walyering field has independently certified proved and probable (2P) reserves of 56 petajoules equivalent (PJe) and an additional 33 PJe of 2C contingent resources in the western compartment. Drilling plans for the Walyering-7 well in the first quarter of the next year have been agreed upon.
The final development cost for Walyering, including well completions, facility construction, and commissioning costs, amounted to $30 million gross, with Strike’s net share at $16.5 million. This cost was higher than initially forecast due to extended construction time, increased labor rates, and additional manpower.
Despite the higher development cost, Strike Energy anticipates recouping its share of the construction cost from gas and condensate sales in about two quarters, emphasizing the project’s high return potential.
Strike Energy has provided a “letter of comfort” to Talon to increase an existing financing facility in accordance with a binding arrangement related to Strike’s acquisition of all issued shares in Talon. This support is intended to assist Talon in meeting its commitments due to the increased final cost of Walyering’s development.
The successful commencement of gas export from the Walyering field is a significant milestone for Talon Energy and Strike Energy, underscoring the project’s contribution to their energy production goals and potential for financial returns. The higher-than-forecast development cost is expected to be offset by future gas and condensate sales, emphasizing the economic viability of the project.
Reporting by Moe Khaled; Editing by Sarah White