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Savannah Now Owns the Seven Asset

By Dahlatu Bashir

Savannah Petroleum, the UK listed minnow, has become a full-cycle E&P company following transformational acquisition of ‘the Seven Assets’, comprising largely the hydrocarbon properties owned by the defunct Seven Energy.

Following a drawn out transaction, which began in October 2017, Savannah, with market capitalisation of $260Million, now owns

  • An 80% interest in Seven Uquo Gas Limited (SUGL) which in turn holds a 40% participating interest in the Uquo field located in South East Nigeria (with SUGL assuming responsibility for all operations of the gas project at the Uquo field following the concurrence of Frontier Oil to give up the gas in the field and retain the liquids);
  • A 51% interest in the Stubb Creek field located in South East Nigeria (through 100% ownership of Universal Energy Resources Limited); and
  • An 80% interest in the Accugas midstream business, comprising the 200MMscf/d Uquo gas processing facility, a c.260km pipeline network and long-term gas sales agreements with downstream customers.

One of Savannah’s partners in the Transaction is African Infrastructure Investment Managers (AIIM) who, as part of the Transaction completion, acquired 20% interests in SUGL and Accugas in return for cash consideration to Savannah of $54Million which it has paid.

The Transaction gives Savannah:· A material producing asset base which is expected to generate significant asset-level free cash flows, “complementing the Company’s prolific Niger exploration and development assets; Exposure to significant upside potential, through both volume and margin uplift, via the utilisation of additional capacity within Accugas’ infrastructure; and  A strong platform in the well-established and high potential Nigerian oil and gas industry”, the company avers in a Press release.

 


Old Mutual Takesa Piece of Nigerian Gas Infrastructure

By Pospectus Mojjido, in Abidjan

With the conclusion of the takeover of Seven Energy assets, a widely known South African Insurer now owns a piece of a grid length, natural gas pipeline in Nigeria.

African Infrastructure Investment Managers (AIIM) is a member of the Alternative Investments unit of the Old Mutual Group, the South African insurance company.

As part of the Transaction completion, AIIM acquired 20% interests in Seven Uquo Gas Limited (SUGL) which in turn holds a 40% participating interest in the Uquo field located in South East Nigeria and Accugas, a midstream business, comprising the 200MMscf/d Uquo gas processing facility, and a c .260kilometre gas pipeline network.

AIIM promptly paid $54Million as cash consideration to Savannah for that 20% share.

The Old Mutual Alternative Investments is one of the largest private alternative investment managers in Africa, with over $4.2Billion under management in infrastructure assets, private equity and impact funding, according to its website. Its investment approach, it avers, goes “Beyond the Obvious” and “enables us to uncover opportunities others may overlook”.

AIIM says it has committed over $1.8Billion in equity investments over the last 19 years. It says its experience spans a range of infrastructure asset classes including toll roads, renewable energy, power generation, ports and communication infrastructure assets.

The company has established local offices in South Africa, Nigeria, Kenya and Cote d’Ivoire and its website says it is currently managing investments with operations spanning 17 countries across East, West and Southern Africa.

 

 


Senegal Set For Launch of First Licencing Round

Bolstered by discoveries of oil and gas off its shores in the last six years, Senegal has decided it will go to the market to offer exploratory tracts.

The state hydrocarbon company PETROSEN, has given the word that the country’s first offshore licensing round will be launched at the Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry (MSGBC) Basin Summit & Exhibition in Dakar in January 2020. The round will be open for six months – until the end of July 2020 – and will comprise 10 offshore exploration blocks.

The MSGBC Basin is the defining exploration frontier of Africa’s oil patch in the post oil-price- crash era. It has hosted, since 2014, several high-profile oil and gas discoveries, set in a variety of play types, both on and off the carbonate shelf, including the Albian sandstone shelf edge SNE oil field – the largest global discovery of 2014 – the 25Tcf Greater Tortue Ahmeyim project – the largest gas discovery of 2015 – and the Lower Cenomanian sandstone basin floor fan Yakaar-1 gas well – the largest global discovery of 2017. All are located offshore Senegal, within ~100 km of the Dakar Peninsula, leaving a vast area yet to be explored.

TGS, the Norwegian geoscience company, claims it holds a range of data across this acreage to support the licensing round, including two dimensional (2D) seismic, three dimensional (3D) seismic, Multibeam and Seafloor Sampling data. The company is also currently acquiring additional 3D seismic data to provide potential bidders with a greater subsurface understanding ahead of bid submissions.

Two new wells are to be spudded in 2020 in AGC and Guinea-Bissau, south of Senegal and in close proximity to blocks in the upcoming license round. Wolverine-1 (CNOOC) and the Atum and/or Anchova (Svenska/FAR) prospects will target shelf edge plays and give vital information about similar plays in the open blocks. The majority of the blocks and acreage offered in the licensing round are in ultra-deepwater depths, as operators plan to target the large, clean, well-sorted sands of the unrestricted basin floor.

 


Nigeria’s Secondary Lease sale Market in A Flux

There has been a flood of activities in the last three weeks in Nigeria’s secondary lease sale market.

In the month that Seplat announced the acquisition of AIM listed Eland Oil and Gas, largely for the complementarity of the latter’s Oil Mining Lease (OML) 40 with its base assets, Oslo listed Panoro Energy ASA agreed to sell its entire stake in OML 113 (Aje field) to another Norwegian Junior, PetroNor E&P Limited.

Meanwhile, in what used to be Petrobras’ assets in deepwater Nigeria, the Canadian minnow, Africa Oil Corp., is purchasing the stakes belonging to oil trader Vitol and Warbug Pincus backed Delonex Energy.

Yet it was only two months ago that LEKOIL announced it was acquiring 45% interest in Newcross operated Oil Prospecting Lease (OPL) 276, in the eastern Niger Delta.

ExxonMobil’s divestment of undeveloped discoveries is ongoing and the global news service, Reuters, has broken the news that Chevron would be divesting more than it was previously thought it would be. Chevron has not vigorously denied the report.

But the mother of all of these asset sales will be TOTAL’s divestment of its 12.5% stake in Shell operated OML 118, if yesterday’s Reuters report holds up. OML 118 hosts the Bonga main field, the Bonga North West, the Bonga North and the Bonga South West structures. The Bonga South West is under consideration for a Final Investment Decision (FID) on a project expected to deliver over 175,000BOPD at peak.

 


Panoro Sells Aje Stake to PetroNor

Oslo listed Panoro Energy ASA has agreed to  sell its entire stake in OML 113 to another Norwegian Junior, PetroNor E&P Limited.

Panoro holds a 6.502% participating interest, with 16.255% cost bearing interest, representing an economic interest of 12.1913% in OML 113, which hosts Aje field, offshore Lagos, Nigeria.

Aje field is the only producing hydrocarbon asset outside of the Niger Delta basin.

It contributes 3,200Barrels of Oil Per Day, or slightly less than 0.2% of the country’s output.

But there are gas reservoirs which constitute the field’s upside, although the partners have significant challenges raising cash to do the project.

PetroNor is to acquire Panoro’s interest for $10Million, to be paid in new PetroNor shares, with a contingent future payment of up to $25Million based on future gas production volumes.

The Transaction is conditional on execution and conclusion of an agreement with the operator of OML113, expected to conclude in the coming weeks, and upon the authorisation of the Nigerian Department of Petroleum Resources and the consent of the Nigerian Minister of Petroleum Resources.

PetroNor says that its rationale for the Transaction was to: “become a technical operator of a de-risked development project with significant upside potential”, giving it the “opportunity to leverage PetroNor’s technical experience to progress [the] Aje project and deliver near-term increased commercial recovery of hydrocarbons.”

Aje field is operated by Folawiyo Aje Service Limited, which is a company that includes representatives from all the parties. It’s not clear how PetroNor’s willingness to be operator ties into this.

 

 


TOTAL Takes Over Moza LNG

The French supermajor will lead the largest greenfield LNG development project in Africa

TOTAL has closed the acquisition of Anadarko’s 26.5% operated interest in the Mozambique LNG project and will now be leading the development of the proposed 12.8Million Ton Per Annum (12.8MMTPA) facility.

The Mozambique LNG will valourise some 2Billion standard cubic feet of natural gas per day (2Bscf/d), making it the continent’s largest gas project currently in development.

The French major closed the takeover deal, which includes acquisition of Anadarko’s assets in Algeria, Ghana and South Africa, for a purchase price of $3.9Billion.

TOTAL says it has now received all requisite approvals by the relevant authorities and partners, for the transactions.

The purchase, which now makes TOTAL the largest E&P operator in Africa, commenced on  May 3, 2019, when the Paris based firm reached a binding agreement with Occidental, which was about to buy up Anadarko, to take over all of Anadarko’s interests in Africa. On August 3, 2019, TOTAL signed the subsequent Purchase and Sale Agreement.

TOTAL is taking over the Mozambique LNG project after financial sanction.

The Final Investment Decision for the project was taken in June 2019. The announcement, by Anadarko and the co-venturers in Mozambique’s Offshore Area 1, “confirmed the Area 1 Plan of Development was now effective, with notice provided to the Government of Mozambique that all conditions precedent have been fulfilled, and the project can now advance to the construction phase”, Anadarko said at the time. It would monetise over 75Trillion cubic feet of natural gas in the Golf-Atinho fields in the deep-waters of the Indian Ocean.

The project had successfully secured in aggregate 11.1 MMTPA of long-term LNG sales (representing 86% of the plant’s nameplate capacity) with key LNG buyers in Asia and in Europe. Additionally, the project is expected to have a significant domestic gas component for in-country consumption to help fuel future economic development.

As the new operator take over Africa’s largest greenfield LNG project, Patrick Pouyanné, Chairman & CEO of TOTAL, says the company “will bring the best of our human, technical, marketing and financial capacities to further strengthen its execution. He says that TOTAL “will of course work on the strong foundations established by the previous operator and its partners, in order to implement the project in the best interest of all those involved, including the government and the people of Mozambique.”

 


No Go Ahead Yet For Nigerian Licensing Round

By Fred Akanni, Editor in Chief

There is no plan yet in President Muhammadu Buhari’s second term, to propose any open licencing round of Nigeria’s upstream hydrocarbon property.

“It’s too early in the tenure of the Minister of State (Timipre Sylva), who resumed duties on August 20, 2019”, say ranking officials at the Ministry of Petroleum Resources in Abuja, the country’s political capital.

“Proposals for Bid Rounds are always routed through the office of the Minister of State”, a ministry official told Africa Oil+Gas Report in Abuja “At the moment, he hasn’t received one”.

Mr. Sylva has talked on record about certain issues, including sale of NNPC assets (“We have not decided we would do it”) and Petroleum Industry Bill (“I’d work with experts to deliver it”), but he hasn’t specifically mentioned a licencing sale.

Nigeria has not had a licensing round in the last 12 years. The country’s exploration activity is on a downslope, with 31 of 33 active rigs in the country’s basins working on development drilling, and hardly any appraisal. Over 35 prospecting and mining leases, some of them having been held by companies for as long as 27 years, are lying fallow, without any robust work programme.

Asked if the issue of licensing round was discussed at the two day retreat the Minister of State had with the directors and chief executives of the Ministry two weeks ago in Abuja, several sources within the Ministry and the NNPC, the state hydrocarbon company, said it was not. But for the record, Africa Oil+Gas Report was told: “What was discussed at the retreat, stays at the retreat”.

 


Sonangol Preps for First Presentation on Sale of Assets

By Veronica Gespucci, in Windhoek

Sonangol will be making its first technical presentation to the public on its planned asset sale in October 2019.

It will be in Luanda.

The Angolan state hydrocarbon company will be selling equity or whole in a total of 50 subsidiary companies and other assets, twenty of them in 2019.

The sale is part of the Privatisation Programme (ProPriv), which lists 195 state-owned enterprises to be fully or partially privatised by 2022.

There will be a roadshow in Dubai after the Luanda outing.

Sonangol -owned assets make up about a quarter of the entire Privatisation bucket list. The once powerful state energy firm will dispose of 20 companies and assets by December, with 26 planned to be sold by 2020, three in 2021 and one in 2022.

The list includes divestments in the subsidiaries and assets of Sonangol Cabo Verde – Sociedade e Investimentos and Óleos de São Tomé and Príncipe, as well as stakes in Founton (Gibraltar), Sonatide Marine (Cayman Islands), Solo Properties Knightbridge (United Kingdom), Societé Ivoiriense de Raffinage (Cote d’Ivoire), Puma Energy Holdings (Singapore) and Sonandiets Services (Panama), by 2021.

Sonangol will sell also its stake in WTA-Houston Express and French company WTA, as well as assets in Portuguese real estate companies Puaça, Diraniproject III and Diraniproject V, in Sonacergy – Serviços e Construções, Sonafurt International Shipping and Atlantis Viagens e Turismo.

Sonangol also holds assets to be privatised in Angolan companies in the Health, Education, Transport, Telecommunications, Energy, Civil Construction, Mineral Resources and Oil and Banking sectors.

Sebastião Gaspar Martins, Sonangol’s non executive chairman, says the sale of these non-core assets will make the company “financially more robust.” Sonangol is expected to have the wherewithal, going forward, to focus on hydrocarbon properties.

 


LEKOIL Looks For Partner to Take Over Disputed 23% Stake in OPL 310

LEKOIL has agreed with Optimum, its partner in Oil Prospecting Lease (OPL) 310, in deepwater Nigeria, to use its 22.86% equity stake in the Block as a potential funding and security vehicle for the accelerated development of the Block by an industry partner or a third party that elects to farm-in to the Block to fund field development.

The AIM listed LEKOIL has a 17% equity on the lease that has been authorised by the Nigerian authorities, but has been unable to get the consent of the government for another 22.86%, equity, which it purchased with $13Million from Afren in 2015, mainly because Optimum, the holder of the licence (who sold the stake to Afren in the first place), disagrees that LEKOIL had legitimately bought the equity from Afren.

“This dispute has been the principal reason that development of the Block has been delayed”, LEKOIL says in a release.

LEKOIL had taken the President of Nigeria (who is the Minister of Petroleum) to court over the non-granting of consent for that equity for four years. It lost the case and decided not to appeal.

“Rather than pursue this matter further, the Parties have agreed to recourse to sourcing a third party that will bring money to fund the appraisal and development of the field”, LEKOIL explains.

The resource estimates of the Ogo field, the undeveloped discovery in the licence, is 750Million barrels of oil equivalent. The two probes on the structure were not tested, so the volumes could be less. But they also could be more and there’s the perception that most of it is natural gas, which now has a growing market in Lagos, the nearest city inshore of the field.

The potential Funding Partner may be sourced by either LEKOIL or Optimum. The agreement does not address the recovery of the $13Million consideration previously paid by LEKOIL with respect to the acquisition of the shares of Afren Oil & Gas (Nigeria) Limited (“AOGNL”) in 2015 (which held the 22.86% participating interest in OPL310). The idea is that this money will be part of the farm in consideration to be taken care of by the incoming funding partner.


‘They Don’t Want to Pay Taxes’, Ugandan Government Asserts

By Toyin Akinosho, Publisher

FID for basin-wide development likely to be postponed far into 2020

The termination of Tullow Oil’s farm down from the Ugandan oilfield project was essentially about disagreement with the authorities on Tax payment.

The press release by TOTAL is vague on this specific detail, only saying that “no agreement on the fiscal treatment of the transaction has been reached”.

Tullow’s statement is more pointed about the issue: “this transaction is a result of being unable to agree all aspects of the tax treatment of the transaction with the Government of Uganda which was a condition to completing the Sale and Purchase Agreements SPAs”.

The British minnow then goes on to exonerate itself:

“While Tullow’s capital gains tax position had been agreed as per the Group’s disclosure in its 2018 Full Year Results, the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of tax relief for the consideration to be paid by TOTAL and CNOOC as buyers”.

Meaning that the two huge firms: the French supermajor and the Chinese behemoth didn’t consent to the tax that the Ugandan government wanted from them.

Ugandan authorities flatly debunk this exoneration.

“Tullow sought transfer of its interest without payment of any capital gains tax arising from the sale and also on condition that certain tax deductions, not ordinarily transferable to the buyers, be transferred to the buyers”, says Robert Kasande, Permanent Secretary at the Ugandan Ministry of Energy and Mineral Development.

Kasande’s statement declares that the Government of Uganda had drawn the line clearly since over a year now, but the private parties simply didn’t come to the party.

Following several engagements with the partners (TOTAL, Tullow and CNOOC), “Uganda Revenue Authority communicated its tax assessment on 10th August 2018. Government’s position is that the assessed tax should be paid in line with the laws of Uganda and tax reliefs are treated in accordance with the laws of Uganda”.

Tullow will now initiate a new sales process to reduce its 33.33% Operated stake in the Lake Albert project which has over 1.5Billion barrels of discovered recoverable resources and is expected to produce over 230,000BOPD at peak production.

Ugandan authorities are hoping that this termination does not unduly delay a Final Investment Decision for the project, but Tullow warns: “The Joint Venture Partners had been targeting by the end of 2019, but the termination of this transaction is likely to lead to further delay”.

 

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