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Reliance Industries Ltd Overweight
RELI.BO, RIL IN
BP-RIL deal finally cleared - Our take on what BP can do to help in KG D6
The government has finally accorded approval to BP’s acquisition of 30%
stake in RIL’s E&P assets for 21 of the 23 blocks involved – no onerous
conditions have been imposed. This is positive for the stock as it has been
bogged down by fears of regulatory pushback and more importantly
enables BP’s active involvement in addressing technical issues that have
plagued the D6 development. We had discussions with oil and gas
specialists in our London office based on technical snippets made
available from the RIL-DGH engagement - we give below our take on
how BP can help in D6.
Longer term - a relook at the development plan: The current field
performance has been poor relative to the Field Development Plan, and it
is clear that the risks to production were not fully understood before the
development was sanctioned. BP has significant experience in deepwater
developments. We see the channel play types in D6 as having some
similarities to their deepwater Angolan fields.
Near term - well recompletions could provide a production fix: The
priority for RIL should be to control the increasing water cut in each
well. The existing well diagrams indicate that current perforations are
closer to the gas water contact than is desirable; this may be the cause of
unexpected increased water cut. Recompleting the wells in the upper
sections only could lower water cut. Another potential improvement to
production could be gained by perforating from the areas at virgin
pressure areas pointed out in the DGH consultant report.
Medium term – new data acquisition and updated FDP: The field
currently has about 2 years worth of production data to analyse. If BP
chose to acquire new 3D seismic data, there may be opportunity to
rebuild the FDP; with a revised description of the structure and a revised
depletion plan. This may help to define the reservoir and the hydrocarbon
connectivity leading to better well placement for new wells. Also
reducing the confusion over apparent good connectivity and virgin
pressure in main channel sands.
Weather window are constraints: The short weather window in D6
could constrain BP led fixes to D6 production. As such, barring any
success from RIL’s current well workover programme, D6 production
ramp-up would likely come through only over the next couple of years
Clarity on timelines will be a catalyst for RIL: Newsflow on new
drilling schedules, tying up of wells will be further positives for RIL
stock, in our view.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Reliance Industries Ltd Overweight
RELI.BO, RIL IN
BP-RIL deal finally cleared - Our take on what BP can do to help in KG D6
The government has finally accorded approval to BP’s acquisition of 30%
stake in RIL’s E&P assets for 21 of the 23 blocks involved – no onerous
conditions have been imposed. This is positive for the stock as it has been
bogged down by fears of regulatory pushback and more importantly
enables BP’s active involvement in addressing technical issues that have
plagued the D6 development. We had discussions with oil and gas
specialists in our London office based on technical snippets made
available from the RIL-DGH engagement - we give below our take on
how BP can help in D6.
Longer term - a relook at the development plan: The current field
performance has been poor relative to the Field Development Plan, and it
is clear that the risks to production were not fully understood before the
development was sanctioned. BP has significant experience in deepwater
developments. We see the channel play types in D6 as having some
similarities to their deepwater Angolan fields.
Near term - well recompletions could provide a production fix: The
priority for RIL should be to control the increasing water cut in each
well. The existing well diagrams indicate that current perforations are
closer to the gas water contact than is desirable; this may be the cause of
unexpected increased water cut. Recompleting the wells in the upper
sections only could lower water cut. Another potential improvement to
production could be gained by perforating from the areas at virgin
pressure areas pointed out in the DGH consultant report.
Medium term – new data acquisition and updated FDP: The field
currently has about 2 years worth of production data to analyse. If BP
chose to acquire new 3D seismic data, there may be opportunity to
rebuild the FDP; with a revised description of the structure and a revised
depletion plan. This may help to define the reservoir and the hydrocarbon
connectivity leading to better well placement for new wells. Also
reducing the confusion over apparent good connectivity and virgin
pressure in main channel sands.
Weather window are constraints: The short weather window in D6
could constrain BP led fixes to D6 production. As such, barring any
success from RIL’s current well workover programme, D6 production
ramp-up would likely come through only over the next couple of years
Clarity on timelines will be a catalyst for RIL: Newsflow on new
drilling schedules, tying up of wells will be further positives for RIL
stock, in our view.
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