Oil and gas explorer
) has finally resumed drilling operations in the Greater Poseidon
area, off Western Australia.
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The field was being spud by
) semi-submersible rig Transocean Legend. ConocoPhillips had to
halt operations in late May - consequent to the drilling of the
Boreas-1 exploration well in WA-314-P - because a blowout preventer
(BOP) was required to be repaired.
The repair work took two and a half months. According to the
project partner, Karoon Gas Australia Ltd., various efforts to
repair were ineffective. However, the BOP is fully serviceable and
spudding has restarted.
Located about 2.4 miles (4 kilometers) south of the Poseidon-1 gas
discovery in WA-315-P on a large tilted fault block, Boreas-1 is
among the first of a minimum five exploration wells in the Greater
Poseidon area. The block forms part of the northeast leaning
structural high of the greater Poseidon structure.
ConocoPhillips and Karoon have jointly discovered Poseidon-1,
Poseidon-2 and Kronos-1 in the area. In order to support a
liquefied natural gas project, they are targeting to build
ConocoPhillips retains the operatorship of the jointly held
WA-314-P, WA-315-P and WA-398-P Browse Basin permits, which
comprise the earlier announced Poseidon and Kronos gas discoveries.
Karoon has a 40% stake in the WA-315-P and WA-398-P permits and 90%
ConocoPhillips' exploration initiatives toward liquids-rich plays
are gaining momentum through the Eagle Ford, Bakken and North
Barnett shale plays. ConocoPhillips has separated its downstream
business to unlock value, unlike its peer companies --
), which continue to operate as single units.
However, the company faces greater challenges than its larger peers
in generating attractive growth, given its above-average exposure
to the mature regions. Again, though Conoco is one of the largest
natural gas companies in North America, it lacks material exposure
to the prolific non-conventional plays.
We maintain an Underperform recommendation on ConocoPhillips for
the long term.