Agreements reached last week could lead Bridge Energy (LON:BRDG) to cash in early from its success with the Asha oil discovery in the Norwegian North Sea.
The discovery was made a touch over three months ago, though its development may now be fast-tracked after it was incorporated into a neighbouring field development project.
The Det Norske operated Ivar Aasen project, which was already an amalgamation of three discoveries, lies next door to Asha, and is currently awaiting approval from the Norwegian authorities.
After an agreement between the Asha partners and the companies developing Ivar Aasen, talks are now being lined up to apportion development costs and revenue shares for the enlarged project.
The talks are effectively commercial negotiations, informed by an extensive data sharing exercise.
It is expected that the terms of the deal will be agreed by mid-2014, and the new oil field could come online in 2016.
AIM-quoted Bridge, which owns 20% of Asha could, however, unlock the value of the discovery much sooner.
Speaking with Proactive Investors, chief executive Tom Reynolds explained that one option for Bridge could be to sell its stake.
He says there are a number of other oil firms that are interested in these kinds of unitisation plays.
“We can continue with Asha and fund our share of the development. That’s the status quo option if we do nothing else.
“We also have some commercial options. There may be other companies for whom the 20% Asha interest looks very attractive, and therefore they may be interested in buying or farming into our stake in the project.”
There could also be potential for an asset swap deal, and depending on the asset in question that could perhaps make more sense for Bridge, Reynolds said.
“We are very alive to those possibilities.”
Reynolds also says that a wider consolidation of the interests in the two projects is possible and certain parties may look to buy out a number of the smaller interests.
As projects go, Asha has moved along very quickly with the discovery just being confirmed three months ago.
Shortly after, in February, further analysis of the well’s findings confirmed the size of the Asha discovery to be much larger than estimated prior to drilling.
Bridge upgraded its estimates for recoverable resources to between 30mln and 100mln barrels of oil, up from the prior range of 25mln to 35mln barrels. And it also highlighted the potential for further appraisal work.
The rapid progress of the Asha project, which promises to shortly deliver certified reserves and a comparatively quick route to development, may have caught some investors by surprise.
But Reynolds explains that because of well’s proximity to other developments a twinned ‘fast track’ approach was always a possibility.
“I think we did anticipate some of what’s happened, because of the traction in the area with two nearby development projects moving along.
“We thought that if we had some success in the well then there’d be the potential to hook into one of the projects, depending on what we found.
“This is a positive outcome for Bridge. We’ve seen contingent resources with the drill bit and the field is formally approved in the summer it is likely we’ll see those number confirmed as 2P reserves.
“That’s a pretty quick upgrade from discovery to resources and then into reserves in a short space of time. That’s a solid result for Bridge.”
Asha’s success was not the only highlight of Bridge’s recent exploration work, as it also unearthed new discoveries with three of the past four wells being a success.
In October, the Garantiana struck oil and the Contender well found what is now known as the Cormorant East discovery, which will be tied into the nearby Comorant North platform.
Coming up, the company also has a number of potentially high impact wells lined up for 2013, and its busy schedule is supported by its oil producing assets – the Victoria, Duart and Boa fields – which are producing around 1,000 barrels a day now and are likely to increase to 1,700 barrels per day when Duart restarts in October.