– Since 2012 – 2013, our strategy has been near-field value driven exploration, said Steinar Sørensen, Business Development Manager at LOTOS Exploration and Production Norge at the NCS Exploration Strategy 2019 conference in Stavanger in November.
LOTOS has gradually been growing on the Norwegian continental shelf (NCS) through several acquisitions in the last few years. In 2013, LOTOS bought assets in the NOAKA area (North of Alvheim Krafla Askja), and in 2015 they expanded further by acquiring assets from Exxon in the Sleipner area.
Both areas are considered hub areas – areas with several producing fields or one producing field with several prospects close by that can potentially be tied into production.
– These acquisitions were done in terms with our hub strategy to generate cash flow quickly and identify and define new prolific areas close by with short lead time.
According to Sørensen, LOTOS sees a stable and long-term production from its 15 % ownership in Sleipner (currently six licences and four producing fields), while also having upside potential through exploration and infill wells.
– Sleipner is also storing CO2. CCS is a business aspect we want to be a part of, being a Polish company, Sørensen said, referring to Poland’s high CO2 emissions from coal-fired power stations.
The NOAKA area may hold an even greater potential for future discoveries, and the licence partners are currently in discussions on how to develop the area. LOTOS holds 15 licences and ownership in 3 producing fields.
According to Sørensen, several prospects will be drilled in the area in the years to come, and the resource base will be optimized by integrating exploration and production experience.
The latest and biggest discovery of the year in the NOAKA area was the 25/2-21 Liatårnet discovery with gross estimated resources of 80 – 200 mmboe. A second well will be drilled in Q1 2020.
Sørensen also talked about investments on the NCS in a broader perspective. Referring to analysis by Westwood Global Energy Group, Sørensen pointed out that only 20 % of the operating cashflow on the NCS is being reinvested into new projects.
– Although this is higher than UK (16 %), is it sufficient to hinder a steep decline in production after 2023?
Looking at the Westwood 2019 – 2023, estimates, LOTOS is one of the top scoring companies, with an estimated reinvestment ratio of 50 + % on the NCS.
– New investments in Norway requires predictable and stable conditions for exploration, development and production, a stable tax system and access to new areas.