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All articles in the Farm in, Farm Out Section:


Lekoil Is The Preferred Bidder For ConocoPhilips’ Nigerian Assets..

 

Lekan Akinyanmi, CEO, Lekoil

“We have a preferred bidder”, Conoco Phillips wrote in a message to Oando, Seplat and Transcorp/MidWestern on the night of Wednesday, October 31, 2012. But the company didn’t name the winner to the three losers, leaving all of them guessing. Lekoil, the least known of the four last runners, won the bid hands down with its $2.5Billion offer.  There are feelers that one of its several institutional backers is willing to put down a hefty share of the sum, even as the negotiation process is being finalised. But we had goofed. We announced, in last week’s edition of this newsletter, that Oando, with $1.3Billion bid, was leading the race. We were wrong but the fact is that our assumptions mirrored those of some of the most impeccable sources in the industry. “You know, we easily forget about Lekoil”, noted one respected industry watcher.

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Libya Won’t Auction Oil Blocks Until 2014

The new government in Libya is not in a rush to have a bid round of hydrocarbon acreages in the next year and half. This much can be gleaned from statements made at the Libya Oil and Gas Summit which ran in Tripoli from September 24 and 26, 2012.

An impending review of the blocks in terms of potential risks, the type of contracts, as well as the pre-qualification of bidders will keep the government’s hands full.

Libya had total proven oil reserves of 47.1 billion barrels as of December 2011, according to BP Statistical review of world energy. The country is the largest tank in Africa, and one of the ten largest globally. Some 80 percent of Libya’s proven oil reserves are located in the eastern Sirte basin, which accounts for most of the country’s oil output. Libyan oil is generally light (high API gravity) and sweet (low sulfur content).

The transitional government which took power after the Civil war had declared intention to review all the extant contracts. The new, elected government is saying the same thing. The review, they have both sought to make clear, is not with the aim of taking away acreages from any company. It’s expected to make the new rulers themselves get a grip on the environment in which they are playing.

Under Ghadaffi, there was so much opacity in contracts.

The pre-war, 1.65MMBOPD Libyan production was achieved by nine producing companies, joint ventures and consortia including the state owned Arabian Gulf Oil Company (AGOCO),  which is the country’s largest producer, with 350,000BOPD, Sirte Oil Company (another state hydrocarbon company),  Waha Oil Company (comprising the major state company NOC and ConocoPhillips, Marathon and Hess), Akakus Oil operations(NOC, Repsol and others), Melitah Oil&Gas(ENI and NOC), Mabruk(TOTAL and NOC), Wintershall, Haroungue (Suncor and NOC), Zueitina consortium(NOC, Occidental and OMV).

The new government comes across as friendlier to Western companies, and may adopt a new contractual model that is less onerous than the current provisions. But a lot is still uncertain in the new Libya.


Lukoil Converts Independence Acreage To PSC

Lukoil

Russian operator LUKOIL has signed a production sharing agreement with the government of Cote d’Ivoire, covering the 450 km2 offshore block CI-524 in the Gulf of Guinea.

The agreement converts an exploration effort into a production programme: Block CI-524 represents an eastern part of block CI-401 which LUKOIL Overseas has been involved in exploring since 2006. Lukoil (which has since taken over operatorship from Vanco), holds a 60% interest, PanAtlantic (former Vanco) has 30% and state hydrocarbon company PETROCI has 10%.

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AP Desperate For Funding, Keeps Talking With The Chinese

African Petroleum Corporation, the Australia listed operator, is close to securing much needed financing
partnership in working up its frontier acreages in West Africa. The Memorandum of Understanding (MoU)
which it signed with PetroChina, a subsidiary of the China National Petroleum Corporation, gives the latter
until August 31, 2012 to agree an investment in up to 20% of Block LB-09 in Liberia and up to 20% in one or more
exploration blocks in The Gambia, Ivory Coast, Liberia, Senegal and Sierra Leone.
The value of the deal has not been agreed and the deal is subject to government, regulatory and other approvals, African Petroleum noted in a widely circulated release.

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My Oil Well Is In Your Premises

Several neigbouring countries in Africa are in conflict over “Oily” boundaries.

The just concluded court battle between Cross T River and Akwa Ibom States rewrites the Eritrean war of
independence in small letters.
Cross River was praying the country’s highest court to confer on it the status of a littoral state. It wanted to be defined-even if not by geography-as a state bounded by the Atlantic Ocean to the south. The verbal court
arguments, in a democratic jurisdiction, echoed the claims of angry roar of Ethiopian fighter jets pounding Eritrean territory for thirty years: “the coastline is ours!”.
The Ethiopians lost the red sea in spite of their mighty army. The Cross Riverians lost the Atlantic in spite of their sparkling brand name.

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It’s Pay Day For Africa Oil Corp

Africa Oil Corp is reaping the benefit of moving early into East Africa and buying a slew of blocks off the governments of Kenya, Ethiopia and Somalia.Nowthe company is experiencing a significant pay day. Here are some of the transactions that indicate that the “landlord” is taking his “rent”:

Kenya: Tullow Shells Out $759,000
Tullow has paid $759,000 to Africa Oil Corporation in consideration of past costs to acquire an additional 15% interest in Block 12A in Kenya. The farm in transaction has been concluded and has received Kenya government approval.

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Vanoil Receives Extension On Kenyan PSC

Vanoil Energy Ltd. has received the seven month extension to its PCS it requested from the Kenyan Ministry of Energy. This extension extends the contract for Blocks 3A and 3B from September 30, 2012 to April 30, 2013.
The extension allows Vanoil to complete the analysis of 100 sq km of high resolution 3D seismic data designed to geologically pin point its initial drill site location. The mobilization was expected to be completed in early August
2012 and data acquisition to be started mid-August and completed in early-October.

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Algeria Applies To Join The Shale Gas Club

Algeria, located squarely in water –starved desert terrain, has become the first African country to officially sanction exploration and exploitation of Shale gas in its petroliferous basins.
Nine months after signing a cooperation agreement with ENI, the country is pleading with Anglo Dutch major Shell and US behemoth ExxonMobil to bring their technologies for the development of unconventional oil, with particular focus on shale gas. Negotiations with those two companies are ongoing.

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Tunisia Hands Out Two DualEX and Alpine Oil&Gas Get Pieces of The Pie

Tunisian authorities handed out two exploration permits in September, 2009. On September 11, they granted the Bouhajla Permit, to ETAP as Holder and to DualEX, a Canadian petroleum company, as Contractor. The 416 sq km onshore acreage was granted for an initial period of three years, with two renewal period of three years each, and a commitment of a seismic acquisition and an exploration well for each mentioned period.

On September 18, the acreage known as Chorbane, (which had been converted into an exploration permit from a prospecting permit), was granted to ETAP as Holder and Alpine Oil and Gas, an Australian petroleum company, as Contractor. It is situated in Central Tunisia and covers an acreage of 2428 sqkm. The contract allows an initial period of three years with two renewal periods of three years each, during which the Contractor commitments are to drill an exploration well, each mentioned periods


Tullow Will Buy Out Heritage

UGANDA

UK listed Tullow Oil has exercised its right of pre-emption in respect of the proposed sale by Heritage Oil & Gas Limited (“HOGL”) of its 50% interest in Blocks 1 and 3A in Uganda.

“Tullow Uganda will enter into a Sale and Purchase Agreement (“SPA”) with HOGL, a subsidiary of Heritage Oil plc (“Heritage”)”, the company said in a statement.. On 18 December 2009, Heritage announced that the consideration for the transaction comprises $1.35 billion cash and a further contingent, deferred consideration of either US$150 million cash or an interest in a mutually agreed producing oil field independently valued at a similar  amount. A syndicate of Tul1ow’s-core-re1ationshi-banks- has provided the banking facilities required to enable Tullow to exercise its right of pre-emption. Completion of the SPA is subject to certain conditions which include approval by Heritage shareholders at a meeting scheduled for 3pm (GMT) on 25 January 2010 and receipt of necessary consent from the Ugandan Government.

“In parallel with exercising its pre-emption right, Tullow has been running a transparent farmout process which has attracted a significant amount of interest from major international and national oil companies. The process is now well advanced and potential partners are supportive of the Group’s decision to pre-empt.

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