Tulip Oil has reduced its capital and operating expenditures as a response to the low oil and gas prices as well as the coronavirus pandemic, but this will not stop the Group from taking steps in preparation for production increase at its Q10-A gas field in the North Sea.
According to its quarterly update on Thursday, Tulip Oil has taken measures in response to the COVID-19 outbreak and the company has experienced no business interruptions and staff are largely working from home.
With an average unit production cost under 10 $/BOE (incl. G&A), Tulip Oil continues to generate strong margins despite the low prices.
The Q10-A field produced 198 million standard cubic meters of gas during Q1, reflecting the natural pre-compression decline from 258 million standard cubic meters in Q4 of last year. The average realized gas price was 9.9 €/MWh during Q1 compared with 12.4 €/MWh in the previous quarter.
Production continues from all 4 wells and the calibration of the reservoir models is being progressed in preparation for 2 additional future Q10 wells. Steps are also being taken to enable compression for an increase in daily production at the appropriate time.
Tulip Oil continues to mature additional new drilling targets predominantly to appraise reservoirs near the producing Q10-A field. These targeted reservoirs have been drilled historically and flowed gas to surface, similar to Q10 before the 2015 ‘discovery’ well.
A phased development plan for Steig is being progressed and optimized. Static and dynamic reservoir models are under development. The project has been sanctioned to commence front-end engineering and permitting.