Author: Charlotte Knudsen

The primary exploration target of the well was to prove hydrocarbons in reservoirs of Middle Jurassic age (the Garn and Ile Formations).

The well encountered approximately 83 meters of sandstones of moderate to very good reservoir properties in the Garn Formation. The well also penetrated a 9 meters gas column in sandstones of Late Cretaceous age of poor to moderate reservoir properties, approximately 4 meters in total. The reservoirs in the Garn and Ile Formations did not contain hydrocarbons.

Preliminary estimates indicate that the size of the discovery is between 0.5 and 1.6 million standard cubic metres (Sm3). The partnership will assess the discovery in conjunction with other discoveries and prospects nearby.

The well was drilled to a vertical depth of 3 518 meter below sea level and terminated in the Ile Formation of Middle Jurassic age.

For more information see full press release from the Operator at the NPD webpage.

PL 938 was awarded in the 2017 APA round and is operated by Neptune Energy Norge AS (60 per cent) with ConocoPhillips (20 per cent before swap) and Vår Energi AS (20 per cent) as partners. An exploration well is planned to be drilled in the license in 2021 or 2022.

PL 1047 is operated by Aker BP ASA (40 percent) with Concedo ASA (20 percent), ConocoPhillips (20 percent before swap) and Pandion Energy (20 percent before swap) as partners. The license is located in the North Sea, adjacent to the Martin Linge field.

CEO of Pandion Energy, Jan Christian Ellefsen, says in a comment:

“With this transaction we commit to our fourth exploration well in the Norwegian Sea, reflecting our optimistic view on the remaining resource potential in this prolific part of the Norwegian continental shelf. Together with ongoing and planned wells in PL 263 D & E (Appolonia), PL 891 (Slagugle) and PL 929 (Ofelia), we now have a portfolio of four exploration wells, all close to existing infrastructure.”

The transaction is subject to customary conditions for completion, including approval by the Norwegian Ministry of Petroleum and Energy.

On 25 September, OKEA ASA announced an agreement with Neptune Energy Norge AS for the acquisition of a 30 per cent interest in PL 938. Neptune Energy Norge AS will retain a 30 per cent interest and remain operator of the license.

Total investments in the Hod development project are estimated to around USD 600 million and is expected to create around 5 000 man-years of employment during the execution phase, including ripple effects. The field is planned to be put on production during first quarter 2022. Recoverable reserves are estimated to around 40 million barrels of oil equivalents. Aker BP is the operator (90 per cent ownership interest) with Pandion Energy as its only partner (10 per cent interest).

Chief Executive Officer Jan Christian Ellefsen of Pandion Energy says in a comment:
“The Hod PDO submitted today is an evidence of the significant positive effects expected from the temporary changes to the Petroleum Tax Act. This is a profitable project which will generate work for Norwegian oil service companies during a challenging period for the industry and, over time, return large tax revenues. To Pandion Energy, this project also marks our third PDO, all with a clear environmental profile being powered from shore with ultra-low CO2 emissions.”

The Hod field has produced oil in the past from what was the first unmanned platform on the Norwegian continental shelf. The new Hod platform, to be named Hod B, is a copy of Valhall Flank West and will be delivered with an electric lifeboat monitored from the Valhall field centre. The crane and seawater pump will also be electric which, in addition to ultra-low CO2 emissions, will reduce the need for maintenance. The plan is to drill five wells with side-tracks to increase the recovery factor.

For further information, please contact:
Jan Christian Ellefsen
CEO Pandion Energy
tel: +47 91 74 48 99

On Monday 8 June, the Norwegian Government and the three largest opposition parties agreed on temporary changes to the Petroleum Tax Act in support of the oil and gas industry. Hod is the first project to be launched as a direct consequence of these changes.

Chief Executive Officer Jan Christian Ellefsen of Pandion Energy says in a comment:
“The board’s approval to move forward with the Hod development in the current market environment has been made possible by the temporary changes to the Petroleum Tax Act. For Pandion Energy, equal treatment of companies within and outside tax position, through negative instalment tax for the latter group, has been a decisive factor. We now look forward to the execution phase together with the operator Aker BP, replicating the successful Valhall Flank West project.”

The Hod development project unlocks approx. 40 million barrels of oil equivalents and the field is expected to generate more than NOK 6 billion of tax revenues during its lifetime. Including ripple effects, the project is estimated to create around 5 000 man-years of employment during the execution phase. With power from shore via the Valhall field, Hod also adds to Norway’s growing portfolio of oil and gas producers with ultra-low CO2 emissions.

Chief Executive Officer Jan Christian Ellefsen of Pandion Energy says in a comment:

“Following the COVID-19 pandemic outbreak, managing financial risk has been a high priority. Extending the EFF is a highly cost-efficient measure which strengthens our liquidity reserves and allows us to continue searching for and acting on attractive exploration and appraisal opportunities across the shelf. In this way, extending the EFF is not only about reducing risk, but also enabling the company to create value during a very challenging period for the industry.”

In addition to the EFF, Pandion Energy’s capital structure consists of a Reserve Based Lending Facility (RBL) of USD 150 million and a Senior Unsecured Bond Loan of NOK 400 million, as well as injected and committed, undrawn equity capital of total USD 190 million.

For further information, please contact:

Jan Christian Ellefsen
CEO Pandion Energy
tel: +47 91 74 48 99

Managing Director Jan Christian Ellefsen of Pandion Energy says in a comment:
“We look forward to today’s hearing in the Storting and subsequent proceedings related to the Government’s proposal for interim amendments of the Petroleum Tax Act. We hope that the Government and the opposition parties are able to agree on a solution that ensures the sanctioning of profitable projects and that we also in the future can create value together with a strong Norwegian oil service industry.”

Pandion Energy finds it encouraging that the Government proposes measures to support the industry but notes that the proposal in sum represents a tax increase. Also, that the liquidity effect for companies outside tax position is limited, which will be the case for Pandion Energy in 2020. The Company therefore stands behind the proposal presented by the Norwegian Oil and Gas Association but see the need to highlight the importance of final measures having the desired liquidity effect for all oil companies investing on the Norwegian continental shelf.

In reality, the Government’s proposal implies unequal treatment of companies inside and outside tax position. As it stands today, the proposed measures will have liquidity effect for the latter group only when the final tax assessment has been concluded, i.e. with an average lag effect of approximately 1.5 years related to investments and associated tax losses incurred this year. For companies in tax position, however, the measures have almost immediate effect through a reduction of the instalment tax payments. These are made regularly through six terms, three of which during the second half of the tax year and three in the first half of the following year.

The Government has attempted to neutralise this unequal treatment by allowing companies outside tax position to pledge the anticipated tax loss claim and, on this basis, enable bridge financing from banks and other lenders. For each individual company, however, it is currently unclear whether such bridge financing will be available, and if so, how much and at which terms.

Regardless of such bridge financing, Pandion Energy may in any case be prevented from moving forward with the planned development of the Hod oil field due to restrictions in its existing loan agreements.

Pandion Energy believes the Government could solve said challenges relatively easy within the existing tax payment cycle by allowing negative instalment tax, i.e. reimbursement of the nominal value of tax losses with the same frequency and profile as the ordinary instalment tax payments. This should be tax neutral for the state, but with the advantage of having same liquidity effect for all oil companies investing on the Norwegian continental shelf, whether inside or outside tax position. Such equal treatment is particularly important to ensure that sensible and socioeconomically profitable investment decisions are made even in cases where a field partner group consists of companies in different tax positions as is the case for Hod.

For further information, please contact:

Jan Christian Ellefsen
CEO Pandion Energy
tel: +47 91 74 48 99

Jan Christian Ellefsen CEO of Pandion Energy stated the following:

“2019 was another eventful year with solid operational performance for Pandion Energy. We continue to build on our strengths as an agile and professional team player on the Norwegian Continental Shelf, by a dedicated team with strong commercial and operational capabilities.”

“However, during the first three months of 2020, the world has changed dramatically. The coronavirus is spreading around the world, representing a significant threat to people’s health and causing severe consequences for the global economy, including a material drop in the oil price.”

Pandion Energy recorded revenues of USD 103 million for 2019, mainly related to the Company’s 10 per cent interest in the Valhall & Hod producing fields. Average net production was 4,334 barrels of oil equivalent per day, an increase of 8 per cent compared to 2018, and the average realised oil price was USD 66.4, a decrease of 7 per cent from the previous year.

The Board of Pandion Energy is closely monitoring the situation related to the corona pandemic and the massive drop in the oil price with the objective of making sure necessary measures are taken to protect the people and operations, and that the Company maintains liquidity and stays financially secure.

Pandion Energy remains committed to its strategy of being an active and responsible partner participating in all phases, from exploration through to development of oil and gas resources on the NCS. The Company will continue to invest in proven, high-quality assets with access to existing infrastructure and focus on the further development of its producing assets. The Board considers Pandion Energy to be well positioned for further growth.

Pandion Energy Annual Report 2019

Pandion Energy is pleased to announce the discovery of oil and gas in production license 820 S through the drilling of exploration well 25/8-19 S, including sidetracks A and A2.

The exploration well, including sidetracks, proved hydrocarbons at five different intervals.

Preliminary evaluation of the Iving discovery in the Skagerrak Formation shows recoverable resources of between 12 and 71 million boe (of which approx. 85 percent light oil) within the license area.

Recoverable volumes associated with the Evra discovery in the Eocene/Paleocene injectite reservoir sands, oil in weathered/fractured basement and other oil and gas carrying layers will be considered during the appraisal phase of the license.

At Iving, a gross gas column of 34 metres above an oil column of at least 45 metres was encountered in moderate quality Skagerrak reservoirs. The oil-water contact was not encountered in the well.

Extensive data collection and sampling was carried out in the wells, including pressure and fluid tests (Mini-DSTs) at multiple levels, as well as a successful well test in the Skagerrak Formation in the sidetrack well. Limited by design of surface equipment, the test was carried out with averaged oil and gas production rates of 475 m3/d and 75 600 m3/d, respectively, on a 32/64’’ choke. The measured GOR through the test averaged at 180 m3/m3, while the measured oil gravity averaged at 40 deg API.

Weathered and fractured basement (below a basal conglomerate) encountered an oil column of minimum 41 meter. The oil-water contact was not encountered.

Managing Director Jan Christian Ellefsen of Pandion Energy says in a comment:
“We are very pleased with making a material discovery in our second exploration well. This demonstrates the potential of our exploration strategy focusing on opportunities close to existing infrastructure. We look forward to maturing the discoveries and remaining prospectivity together with the PL 820 S partnership, as well as to commercialize the resource potential now proven in the license.”

These are the first and second exploration wells in PL 820 S. The permit was granted in APA 2015.

The wells were drilled by the semi-submersible drilling rig Deepsea Bergen approx. 8 kilometres northwest of the Balder and Ringhorne Field in the central part of the North Sea.

MOL Norge is the operator of the production license with a 40 percent participating interest. In addition to Pandion Energy (10 percent), the partnership also consists of Lundin Norway (40 percent) and Wintershall DEA (10 percent).

For further information see press release from the Norwegian Petroleum Directorate: Oil and gas discoveries near the Balder field