Valaris Limited VAL and Jadestone Energy are developing the Montara field offshore Australia, for which the Valaris 247 jack-up rig has arrived at the location. The jack-up rig is scheduled to undertake a drilling operation at the Montara field.
Details of Drilling Operation
This drilling operation represents significant part of Jadestone Energy’s capital program for 2025. The Valaris 247 rig is expected to drill a side-track well at the Skua-11 formation. As part of the development, the operations at the Skua-11 well will involve the safe decommissioning of the existing SK-11 well, which implies that the existing well will be plugged and abandoned. After the decommissioning activities are completed, a side-track well will be drilled in the Skua structure. The side-track will be drilled at a higher level, which should speed up the recovery process for hydrocarbon reserves in the formation.
Expected Production
The Skua-11ST drilling program is anticipated to have a duration of 60 days. Once the well comes into service, it is expected to produce at an initial rate of 3,500 barrels of oil per day. This drilling program is also expected to prolong the economic lifespan of the Montara field offshore Australia by a year.
Financial Impact
Jadestone Energy, an oil and gas exploration firm, mentioned that the costs associated with drilling the well is approximately $62 million with a projected payback period of 16 months. This implies that it will be able to recoup the initial investment on the project within 16 months. The company further estimates that the internal rate of return for this project is 65%, which indicates strong financial returns on the investment.
The company is enthusiastic about safely executing the drilling program at the Montara field. Per Jadestone Energy, bringing the Skua-11 well back into production would boost its overall production levels, bringing the average group production to approximately 21,000 barrels of oil equivalent per day on a year-to-date basis. The figures marginally exceeded its expectations, despite the downtime faced over cyclones in Australia early in 2025.
VAL’s Zacks Rank and Key Picks
Valaris, an offshore driller, currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the energy sector are Archrock Inc. AROC, Nine Energy Service NINE and Kinder Morgan, Inc. KMI. While Archrock currently sports a Zacks Rank #1 (Strong Buy), Nine Energy Service and Kinder Morgan carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Archrock is an energy infrastructure company based in the United States with a focus on midstream natural gas compression. It provides natural gas contract compression services and generates stable fee-based revenues.
Nine Energy Service provides onshore completion and production services for unconventional oil and gas resource development. The company operates across key prolific basins in the United States, including the Permian, Eagle Ford, MidCon, Barnett, Bakken, Rockies, Marcellus and Utica, as well as throughout Canada. With a sustained demand for oil and gas in the future, the need for NINE’s services is anticipated to increase, which should position the company for growth in the long run.
Kinder Morgan is a leading North American midstream player with a stable and resilient business model, largely driven by take-or-pay contracts, which ensure consistent earnings and facilitate reliable capital returns to its shareholders.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
