The parts are coming together for Enegi Oil's (LON:ENEG) plan to re-position itself as a specialist in rejuvenating marginal oil fields.
In May, it formalised a deal with Advanced Buoy Technology (ABT), a start-up founded by Enegi chief executive Alan Minty, which provides an appropriate development solution for marginal fields using proven oilfield technology, through which the AIM firm is looking to secure suitable development projects.
Starting in the North Sea, the company plans to pick up assets that are considered either too small or too isolated to be economic using conventional development methods.
It will then deploy ABT's un-manned production facilities, or 'buoys', which are expected to dramatically reduce both development and production costs.
At the same time as working on these deals, the firm is also seeking partners to farm into its other assets. The idea is that Enegi will retain non-operated and, where possible, partially carried interests in these projects.
As a result, Enegi will be able to free up time and budget to build up a new portfolio of low risk marginal fields for the joint ABT / Enegi venture.
The recent deal to farm-out a 60% stake in its Canadian assets, in return for a multi-well development programme, which, if the full 12 well programme of work is undertaken, would mean a significant investment in the company’s Western Newfoundland assets , is a clear example of what Enegi has in mind.
“We have some very interesting opportunities in our portfolio, but, the idea, for us, is to focus on what’s near to hand and what will deliver the most bang for our buck,” Minty revealed.
“For the longer-view projects it [a farm-out] is the most likely way we’ll do things.
“We’ve thought about marginal fields, which are stranded or sub-commercial, and, having found a way to alter the economics, we believe that we have a competitive advantage to build up a portfolio of assets at a low cost.
“This is the fastest way for us to grow the business.”
“So, we’re focusing on marginal fields and particularly on fields with known discoveries, which have been highly appraised, where there has already been significant investment and where there has already been production testing, thus very low risk projects.
“That’s [the kind of project] where we’ll apply our technology.
“We’re going to build up the portfolio of marginal fields at great speed now, whilst ensuring we retain value in the rest of the portfolio, but which will not distract huge amounts of management’s time.
“Our initial focus will be the North Sea, but we also plan to look elsewhere as well.”
Enegi is currently in discussions over ‘a number of very interesting’ opportunities and a deal could be forthcoming within the next few months.