OilVoice - Atlantic Petroleum Announces First Oil From the Chestnut Oil Field

Atlantic Petroleum Announces First Oil From the Chestnut Oil Field

Monday, September 22, 2008

P/F Atlantic Petroleum, the international upstream oil and gas company, today announces that its first oil field, the Chestnut Field, has commenced production. Chestnut has been developed using the new Sevan Hummingbird floating production storage and offloading vessel (“FPSO”). Atlantic Petroleum holds 15% interest in UK Block 22/2a which contains the Chestnut Field.

Commenting on the announcement, Wilhelm Petersen, Managing Director of Atlantic Petroleum, said:
“Bringing the Chestnut Field onto production is a historic milestone for Atlantic Petroleum. This is the company's first field to commence oil production and we were one of the active partners to sanction the development. Atlantic Petroleum and its shareholders have been looking forward to this day, as it heralds the start of a new era in the company. Hence, it is an extremely valuable project for Atlantic Petroleum. As a producing oil company, new opportunities will be available to be pursued.” He continued, “utilising innovative new technology, Atlantic Petroleum and its partners have been able to unlock the potential of an oil field which was originally discovered twenty two years ago and represents a great team achievement by all parties involved.”

Bringing the Chestnut Field onto production not only provides Atlantic Petroleum its first oil production but it is also noteworthy as it is one of the smallest stand alone oil field developments in the North Sea, illustrating the trend in oil exploration.

The Hummingbird is the second Sevan 300 unit to be built and the first cylindrical FPSO to be deployed in the North Sea. It will stay on location until the Chestnut Field ceases production. The partnership has leased the FPSO for two and a half year and has options to extend the lease period up to an additional two years.

Chestnut has recoverable reserves estimated at 1.4 million barrels of oil equivalent (“MMboe”) to Atlantic Petroleum and initial average production rates to Atlantic Petroleum are expected to be between 1,300 and 2,100 barrels of oil equivalent per day (“boepd”). The reserves and the production rates mentioned excludes production from South Chestnut.

As earlier announced, a second Chestnut production well, South Chestnut, was spudded on 7th September 2008. If the well comes in as expected, it will be completed and tied-in during early 2009 and is expected to both significantly increase production rates, recoverable reserves and extend the field life. This second production well is expected to be drilled and brought onstream in less than nine months from the investment decision in May 2008.

Partners in the licence related to the Chestnut Field are:
Venture Production (operator): 69.875%
Bow Valley Petroleum: 15.125%
Atlantic Petroleum: 15.000%.

Chestnut Field Key Facts
- The Chestnut Field is one of the oldest undeveloped oil fields in the North Sea having been discovered in 1986
- Chestnut lies approximately 180km east of Aberdeen in a water depth of 120m and is 13km south east of the Alba oil field
- Atlantic Petroleum acquired its 15% interest in the Chestnut Field in 2003
- FDP (Field Development Plan) approval for the Chestnut Field was obtained in late 2005 for a single production well development with water injector support - The production well ( 22/2a-11X) was drilled and tested at rates of between 10,000 and 15,000 barrels of oil per day (“bopd”) in 2001 by the previous operator
- The extended well test lasted for approximately four months and around 1 million barrels of oil were produced before it was shut-in
- The water injector well (22/2a-12) was drilled mid-2006 and showed pressure communication with the original production well

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