Repsol and LLOG partner to accelerate U.S. Gulf of Mexico deepwater projects

Repsol and LLOG Exploration Offshore announced today the signing of an Asset Exchange and Joint Participation Agreement to accelerate plans and optimize the economics of projects in the deepwater Gulf of Mexico.

The agreement covers Keathley Canyon blocks 642, 643, 686, and 687 and provides for the drilling of a delineation well at Repsol’s Leon discovery. In addition, Repsol has joined the LLOG-operated discovery Moccasin in Keathley Canyon 736.

Repsol’s framework for upstream operations is to pursue lean exploration and production activities that increase the efficiency of projects, building a long-term sustainable business regardless of the volatility of oil and gas prices. This agreement aligns with the lean strategy, allowing the company to reach its operational goals thanks to the strengths of its relationship with LLOG.

Proximity between the discoveries — Moccasin and Leon are less than 20 miles apart — and the expertise gained in Buckskin, which will come on stream this year, provides the opportunity for new ways of working, a simpler development architecture, synergies between projects, and efficiency gains.

Leon is a discovery made by Repsol in late 2014 on Keathley Canyon block 642 and is located about 200 miles offshore Louisiana in approximately 6,000 feet of water. Under the new joint agreement, LLOG will become the operator with a 33% working interest in the well while Repsol will have a 50% working interest. A delineation well is scheduled for the second half of 2019 and it will be operated by LLOG.

Likewise, Moccasin is a discovery made on Keathley Canyon 736 in 2011 in over 6,500 feet of water. Under the framework agreed, Repsol will acquire a 30% interest in the discovery and LLOG will retain a 31.35% working interest and operatorship.

Repsol and LLOG have been working together since January 2017, when LLOG took over operatorship of the Buckskin project, which is located on Keathley Canyon blocks 785, 828, 829, 830, 871, and 872 in approximately 6,800 feet of water. The Buckskin discovery was made in 2009, and Repsol optimized the original development plan in 2016 to improve the economics. A new streamlined development plan was designed by Repsol and LLOG, as operator, successfully implemented the optimized plan while improving every aspect of the project through standardization and top-tier drilling performance. Thanks to this process Buckskin has become a feasible project in which first production is expected by mid-year 2019.

Tomás García Blanco, Repsol’s Upstream Executive Managing Director, said, “We have established a solid relationship with LLOG in the projects we have undertaken together so far, finding efficient and smart solutions to address hydrocarbons exploration and development projects in the Gulf of Mexico. This new project takes our partnership to a new level. We believe we have the perfect alliance to develop assets with a lean mindset, turning challenges into opportunities that create value for our stakeholders.”

Philip LeJeune, President and CEO of LLOG, said “We are extremely pleased to sign a significant agreement with Repsol, a highly respected international multi-energy company. We have worked well together at Buckskin and the delineation of the potentially significant discoveries at Leon and Moccasin is another perfect match for the deepwater technical knowledge and development expertise that both our companies possess. These highly prospective deepwater discoveries are in close proximity and are targeting the same Lower Tertiary formation that we are exploiting at Buckskin. We look forward to working together with Repsol on other future deepwater developments in the Gulf of Mexico and greatly value our strong working relationship.”

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