Canadian independent Valeura Energy has restarted oil production from its Wassana field offshore Thailand after an almost three-year hiatus.

Wassana’s crude output began flowing again on 28 April and, with additional wells soon coming back into operation, production rates are ramping up. Former operator KrisEnergy suspended production operations at Wassana in June 2020 after the oil price tanked.

Meanwhile, Palang Sophon — Valeura’s sole partner in Gulf of Thailand Block G10/48 that hosts Wassana — has decided to pull out of the asset.

Palang Sophon will transfer its 11% interest in exchange for the operator agreeing to discharge it from outstanding liabilities relating to joint operations on the licence as well as any future liabilities associated with its past involvement.

This transaction will see Valeura going it alone with an 100% working interest at Wassana, including for its planned infill drilling campaign that is scheduled to begin in the third quarter.

“I am delighted to announce the restart of production from the Wassana oilfield and grateful to our team who oversaw this safe reactivation,” Valeura chief executive Sean Guest said.

“Raising our sights, we are now looking with excitement toward Wassana’s upcoming growth phase as we prepare for infill drilling to start in Q3 2023, with the target of increasing field output toward approximately 5000 barrels per day [on a 100% Valeura interest basis].”

Divesting its own asset

Against this backdrop, the operator has opted to divest its 43% working interest in Block G6/48, also in the Gulf offshore Thailand, which it had acquired last year.

Explaining its rationale, Valeura said it had spent that time “working diligently” to assess the potential for developing the Rossukon oilfield. However, in light of the estimated total capital expenditure of about US$100 million and the required tight project schedule, it has elected to hand over its stake to partner Northern Gulf Petroleum for a contingent cash consideration of US$5 million, payable at first oil from Rossukon, and a further 4.65% overriding royalty associated with its 43% working interest (2% of gross production) from the field thereafter.

“I am pleased to have arrived at an efficient way to realise potential value from licence G6/48,” Guest added.

“Valeura will bear no risk, and no obligation for any capital costs in relation to the Rossukon oilfield development and the contingent payment due to us upon first oil will effectively offset the contingent payment owed by us to the receiver upon first oil (in connection with our acquisition of the licence interest in 2022).

“At the same time, the arrangement provides us a long-term potential revenue stream by way of an overriding royalty.”

Valeura intends to begin immediately the necessary administrative processes to transfer these licence interests.