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  • Drilling of Byron Energy’s (BYE) South Marsh Island 58 G5 well in the Gulf of Mexico sees delays due to mechanical failures
  • After reaching 9650 feet in depth the top drive unit of the drilling jack-up rig failed, and while a replacement top drive was organised, it was later deemed inoperable
  • As such, repairs are still in progress and are expected to take several days before drilling can resume, however BYE says the delay won’t affect its July production date
  • The company claims this type of mechanical failure is not unusual and while the drilling fleet in the Gulf of Mexico is dated, it is reportedly well maintained
  • Shares were trading steady at 16.5 cents as of 1:04 pm AEST

Drilling of Byron Energy’s (BYE) South Marsh Island 58 G5 well in the Gulf of Mexico has been delayed due to mechanical failures.

At the end of May, the well had reached 9650 feet in depth where commercial hydrocarbons in the I2, K4 and L2 sands were logged.

While the company notes this was a positive result, it was at this depth that the transmission on the top drive unit of the drilling jack-up rig, which is essential to the drilling process, failed and required a complete replacement of the top drive.

Before starting the repair, the company decided to run seven-inch production casing and cemented the well, which protected the three hydrocarbon pay sands, and will enable booking and ultimate production of the reserves associated with those sands.

Following completion of the casing work, top drive repairs began, however the replacement top drive was found to be inoperable.

As such, BYE mobilised a new motor to the drill rig which is currently being swapped over.

This process is expected to take several days before the drill rig is commissioned and approved for use.

All unnecessary contract services have been suspended in the meantime.

In a statement released to the ASX, Byron explained to investors that these types of mechanical failures are not unusual in the current drilling environment.

The company said it had undertaken two weeks of thorough checking and testing prior to initially mobilising the rig, and while it found no signs of a pending failure, it is aware that much of the equipment available in the Gulf of Mexico is dated due to a lack of investment.

“Although these rigs are well maintained, equipment failures are one of the major risks of any drilling operation,” the said in a statement.

“The team was satisfied with the condition of the rig and until the top drive failure, Byron had experienced only a few hours of rig related downtime.”

Considering the rigs available, CEO Maynard Smith said the company has a choice to either “use older rigs or not drill at all”.

“Given the quality of our prospects and the current energy price environment, this is a very simple economic decision to make,” he said.

Once the rig is back up and running, BYE expects it will take a further two days to pick up the necessary four-inch drill pipe, complete testing and trip to bottom before drilling can re-start towards the total depth of 10,240 feet and evaluate the primary N2 sand.

Despite the delays, BYE said the current price environment means the financial overruns due to mechanical failures are immaterial given the scope of the project and expects costs will be “easily” overcome with good well results such as those of the G3 and G5 wells to date.

The company also said the delays haven’t altered its production scheduled, with production from both G3 and G5 still expected to begin in July.

Company shares were trading steady at 16.5 cents as of 1:04 pm AEST.

BYE by the numbers
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