Canada’s Husky Energy has expanded its holding in the Liuhua 29-1 field offshore China to 75%, giving it a majority interest in the deepwater asset, it said last week in its first-quarter earnings report.
“Our fixed-price Asia-Pacific business contributed strongly in the quarter, generating EBITDA of more than C$250 million [US$194.8 million],” CEO Rob Peabody said in the statement. “Building on our long-standing and strong partnerships in the region, we are taking a 75% working interest in the upcoming development of the Liuhua 29-1 field at the Liwan Gas Project.”
With its increased participation in Liuhua 29-1 – up from 49% previously – Husky’s working interest share of production when the project ramps up will be 45 mmcf (1.27 mcm) per day of gas and 1,800 bpd of liquids.
The company said it expected to recover around US$247 million in exploration costs on a preferred basis within the first 18 months of production.
Husky also sees its share of capital spending on the project – which is the third deepwater field at the Liwan Gas Project – increasing to about US$670 million, including US$130 million in capital already spent.
During the first quarter, gross production from the existing Liwan fields averaged 367 mmcf (10.39 mcm) per day in sales gas volumes, with associated liquids averaging 16,700 bpd. Within this, Husky had a working interest of 180 mmcf (5.1 mcm) per day of gas and 8,200 bpd of liquids. The company realised a gas price of C$13.95 (US$10.87) per 1,000 cubic feet (US$383.82 per 1,000 cubic metres) in the period.
In March, drilling started on an exploration well on Block 15/33 in the Pearl River Mouth Basin, Husky added. A second well is scheduled for this quarter. Another two wells at the nearby Block 16/25 are planned for the second half.
Three wells are scheduled to be drilled at Liuhua 29-1 in the fourth quarter, in addition to three previously drilled wells. First gas is anticipated around the end of 2020 with production tied directly into the existing Liwan subsea infrastructure and the onshore Gaolan Gas Plant, and then delivered to buyers in the Pearl River Mouth Basin region.