WZ12-8E project 2P developed oil recovery before subtracting production has increased over 150% from 1.95 mmbbl gross (Horizon net 0.49 mmbbls) to 4.89 mmstb gross (Horizon net 1.24 mmbbls) which is an increase of 2.94 mmbbls gross (Horizon net 0.75 mmbbls)
Horizon is pleased to announce a significant increase in reserves for its WZ12-8E project in Block 22/12, Beibu Gulf, China. This updated assessment follows a detailed and ongoing review of production data from the ten WZ12-8E production wells together with the corresponding subsurface data obtained during the drilling of those wells.
• WZ12-8E project 2P developed oil recovery before subtracting production has increased over 150% from 1.95 mmbbl gross (Horizon net 0.49 mmbbls) to 4.89 mmstb gross (Horizon net 1.24 mmbbls) which is an increase of 2.94 mmbbls gross (Horizon net 0.75 mmbbls).
• This significant increase is a consequence of the strong production performance of the initial six Phase 1 wells (“Revisions of previous estimates” in the table below) that gave the Joint Venture encouragement to drill four Phase 2 wells in 4QCY22 (“Transfers from contingent resources” in the table).
• Production of 1.20 mmbbls gross (Horizon net 0.32 mmbbls) in the six months to 31 December 2022 then results in 2P developed reserves at 31 December 2022 of 3.69 bbls gross (Horizon net 0.91 mmbbls).
• WZ12-8E project production continues to outperform pre-drill expectations and averaged ~9,500 bopd gross (Horizon net ~2,500 bopd) in January 2023, which is an increase of ~300 bopd gross on December 2022.
• With the initial WZ12-8E development now complete, the WZ12-8E Production Area has now been formally defined, with the residual WZ12-8 Development Area now relinquished in accordance with the terms of the PSC.
|Reconciliation of 2P developed reserves|
|30 June 2022 to 31 December 2022||Gross||Net|
|Opening balance at 30 June 2022||1.95||0.49|
|Revisions of previous estimates||1.49||0.36
|Transfers from contingent resources||1.45|
|New balance prior to production||4.89 1.24|
|Production 30 June – 31 Dec||1.20||0.32|
|Closing balance at 31 December 2022||3.69||0.91|
The strong production performance of the Phase 1 wells and the subsequent similar early performance of the Phase 2 wells has led to this reserves update. This updated assessment used a number of analytical techniques including in particular observed well production water-oil ratio trend analysis and numerical simulation modelling. The production performance is in turn supported by favourable post-drill mapping, together with longer than planned horizontal wells, and larger vertical offset from the oil-water contact for the Jiaowei wells.
The increase in recovery is a mix of Revisions of previous estimates primarily associated with the five Phase 1 Jiaowei wells (Horizon net +0.36 mmbbls) and the Transfer from contingent resources associated with the three Phase 2 Jiaowei wells and one Phase 2 WZ12-10-1 well (Horizon net +0.39 mmbbls). All Jiaowei wells show generally slower than expected water-cut development which translates to higher recovery, while the single-well fields Weizhou (A1H) and WZ12-10-1 (A11H) wells show encouraging recovery trends generally consistent with pre-drill numerical simulation studies.
Horizon’s current economic assessment assumed an oil price of US$85/bbl for 2023 reducing to US$75/bbl from 2026. This compares with the assessment at 30 June 2022 which assumed an oil price of US$95/bbl for 2HCY22 reducing to US$75/bbl from 2026.
Horizon CEO, Richard Beament commented:
“This reserves upgrade is a pleasing consequence of the strong production performance of the WZ12-8E Phase 1 and Phase 2 wells. The WZ12-8E project has already produced 1.43 mmbbls gross (0.38 mmbbls Horizon net) since start-up in April 2022 to 31 December 2022, but this production has been more than offset by the increased reserves. Horizon and its joint venture partners continue to investigate opportunities to further increase recovery from the WZ12-8E project through expanding facilities and additional drilling.”
|Block 22/12 participants:|
|CNOOC (Block 22/12 Operator)||51.00%|
|Horizon Oil (Beibu) Ltd.||26.95%|
|Roc Oil (WZ12-8E Operator)||19.60%|
|Oil Australia Pty Ltd.||2.45%|
Source: Company Press Release