Independent reserves certification gives Hartshead a major boost into commercial gas production
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Hartshead has received a big boost in the value of its Anning and Somerville gas fields after receiving all important independent reserves certification.
ERC Equipoise’s definition of a 301.5 billion cubic feet proved and probable (2P) – about 52 million barrels of oil equivalent – gas reserve for the two fields means there is now enough certainty for their resources to be considered commercially producible.
As such, Hartshead Resources (ASX:HHR) has classified the two fields as being ‘Justified for Development’ and assigned sales gas volumes based on their reserves, a key step as it progresses potential industry partnering and project financing.
This is expected to substantially increase project value, given that recent UK North Sea transactions have exceeded US$8 ($11.58) per boe of combined 2P Reserves and 2C (best estimate) Contingent Resources.
At this level, the value of Anning and Someville is calculated roughly at about US$2.4bn.
There is potential for further growth with the company planning to start technical and commercial audit of the Phase II and Phase III developments that seeks to establish audited resources of up to 800 billion cubic feet of gas.
“Delivering reserves in license P2607 affirms Hartshead’s core strategy that aggregating high quality, discovered gas volumes, close to infrastructure and delivered to a very strong gas market, demonstrates commercial value and justifies the development of these fields,” chief executive officer Chris Lewis says.
“Having this confirmed by ERCE adds significant value to Hartshead Southern Gas Basin portfolio.
“After sixteen months of work by the Hartshead team in refining and identifying the best development concept, the confirmation that the project has this certainty of being developed is tremendous news.”
The 2P reserves estimate of 301.5Bcf is just a mite shy of the previous 2C Contingent Resource of 324Bcf, a substantial conversion rate by any measure.
Development of the two fields is expected to be achieved through the use of six production wells tied into two wireline capable Normally Unmanned Installation (NUI) platforms.
These platforms will in turn be connected via a subsea pipeline to third party infrastructure for onward transportation and processing to entry into the UK gas network.
Peak production is estimated to be about 140 million standard cubic feet per day with first production expected in late 2024.
Phase 2 will tap the Hodgkin and Lovelace fields, which host further 2C Contingent Resources totalling 139Bcf, while the third phase contains new exploration prospects in its inventory that currently hosts Prospective Resources of 344Bcf.
This article was developed in collaboration with Hartshead Resources, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.