Don Fields Development ahead of project schedule
During the Update Period significant progress has been made on the joint development of the Don Southwest field (Valiant 40% interest) and the West Don field (Valiant 17.275% interest) (together the 'Don Fields') located in Block 211/18a (License P.236) and Blocks 211/13b and 211/18a (Licenses P.1200 and P.236) respectively.
Development drilling is progressing on West Don with the Transocean John Shaw semi-submersible drilling unit ("John Shaw"). The top-hole sections of the two production wells and the water injection well have been drilled and the first production well is due for completion by the end of 2008. Valiant has assigned its rights to a second drilling rig (Stena Spey semi-submersible drilling unit ("Stena Spey")), to the Don joint venture in order to facilitate the acceleration of development drilling in preference to using this rig for 2009 exploration. The Stena Spey will now complete the remaining West Don program starting in January 2009 in parallel with using the John Shaw to drill Don Southwest development wells. Using the two rigs allows early access to the West Don producers and therefore the opportunity to secure first oil from West Don in early 2009.
The net result of this decision will allow the project to remain ahead of schedule at minimal additional cost and will increase the likelihood of slightly accelerating first production from West Don to the first quarter of 2009. Don Southwest is currently forecast to come on production during the second quarter of 2009 under the revised project schedule. Average production from the Don Fields for 2009 is anticipated to be in line with Valiant's estimates at the time of its AIM admission.
The infield pipelines between Don Southwest and West Don have been installed as have the first phase of subsea structures installation. The tanker Submerged Anchor Loading (SAL) unit and the remaining export pipelines are scheduled for installation all by the end of 2008.
The Northern Producer Floating Production Unit ("Northern Producer") modifications and hull refurbishment are on track and the Northern Producer is scheduled for sail-away during November.
Capital costs associated with the Don Fields development continue to be broadly in-line with original estimates. Some cost escalation has occurred since the project commenced though this is within normal project contingency levels.
