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All articles in the Farm in, Farm Out Section:


Aminex On Course of Farming Out Ntorya Gas Field In Tanzania

Aminex Corp, the London listed junior who is a leading gas producer in Tanzania, has revealed discussions with Eclipse Investments regarding a possible farm out of part of its interest in the Ntorya Appraisal Area.

Eclipse is a wholly-owned subsidiary of the Zubair Corporation and is Aminex’ largest shareholder. The Zubair Corporation is one of Oman’s leading business groups.

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Africa Oil Grabs 25% of Impact O&G

Canadian minnow, Africa Oil Corp., has completed buying about a quarter of the equity in Impact Oil and Gas Limited, a private UK company with exploration assets in South and West Africa.

Africa Oil issued 13,946,545 common shares in its capital to Helios Natural Resources 2 Limited and invested $15 million in shares and warrants of Impact. Now Africa Oil owns an approximate 25.2% equity interest in Impact.

Africa Oil Corp. holds assets in Kenya and Ethiopia, including the South Lokichar Basin (25% working interest in Blocks 10BB and 13T), where the Company and its Joint Venture Partners are undertaking activities aimed at sanctioning development. The Company is listed on the Toronto Stock Exchange and on Nasdaq Stockholm.

What’s Africa Oil Buying Into?

Impact Oil and Gas acquired its first asset, the Tugela South Exploration Right, offshore South Africa in 2011 and has subsequently expanded its asset base across the offshore margins of South and West Africa. It has since partnered with ExxonMobil and Statoil (South Africa), CNOOC (AGC – between Senegal and Guinea Bissau) and TOTAL (Namibia and South Africa). It is currently seeking a partner in its Gabonese assets. The company’s current portfolio covers a combined area of over 90,000 km² (gross).

Pillar Four Securities LLP acted as financial advisor and Pareto Securities acted as strategic advisor to Africa Oil in connection with the transactions described herein.


Hess Finalises Ghana Divestment, Exits Africa…

By Johnny Matanmmy, in Malabo

Hess Corporation’s $100 Million Sale of its stake in Ghana comes barely three months after its exit from Equatorial Guinea.

It is leaving valuable assets in both countries; the Ceiba field and the Okume complex in Equatorial Guinea’s Rio Muni Basin were snapped up by Kosmos Energy, who reported that Hess’ lacklustre investment in those assets was the lead cause of decreasing output in the last few years.

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Chevron, Shell Pull Back From Africa

By Jackson Otiti

Chevron Corporation’s divestment of its stake in downstream South Africa, its biggest downstream operations on the continent, is the latest evidence of the American major’s cutback from Africa.

Chevron, and indeed Shell, are coming across as increasingly bearish about their African outlook, at a time when other majors, BP, TOTAL, ExxonMobil and the smallest of them, ENI, take more positions.

Shell has led the taking of over $10Billion by a coalition of partners (including ENI and TOTAL) from asset sale in Nigeria between 2010 and 2015. The AngloDutch major is in discussion with two companies over divestment in three more Nigerian blocks, as we speak.

While Chevron unloads its 75% interests in its South Africa assets as part of its three-year divestment goals announced in 2014, TOTAL’s signalling of taking over the same asset, even though unsuccessful, is symbolic of the French major’s increasing investment in Africa.

British major BP has taken vast swaths of deepwater territory in the North West African margin, notably Senegal and Mauritania. BP is growing portfolios in Egypt and Angola. TOTAL is leading the development of Uganda’s oil resources and has won operatorship in new assets in Angola.

The two largest oilfield developments to come on stream in Africa in 2018 are led by TOTAL. Egina in Nigeria and Kaombo in Angola will each drain at least 200,000BOPD of oil at peak production. The largest oilfield development to take financial sanction in 2018, is led by TOTAL. From around 2022, the development, in landlocked Uganda, will produce over 150,000BOPD.

ExxonMobil is in the process of signing a Petroleum agreement in Ghana. The world’s top supermajor led the charge into Mozambique for most of 2016 and 2017, taking blocks in the bidding round, purchasing stakes in ENI’s Area 4 and vying for stake in Anardako operated Area 1 in East Africa’s southernmost country.

ENI commissioned production from Zohr, Egypt’s largest gas field in December 2017. It is also operating the country’s largest gas production at Nooros field, which produces close to 1Billion cubic feet of gas per day. Nooros was put on stream less than two years ago.

Chevron and Shell, meanwhile, are growing quieter about Africa, which features more in their divestment portfolios than their growth plans.


Ghana, ExxonMobil Sign Petroleum Agreement Tomorrow

By Toyin Akinosho

The word’s top supermajor lands a position in the West African Transform margin

Ghanaian authorities will be signing a Petroleum Agreement with ExxonMobil on Thursday, January 18, 2018, in Accra, the country’s capital.

The event, scheduled to take place at the Kempiski Hotel in the city, is the culmination of discussions that began on April 30, 2015, when the then Minister of Petroleum and the Ghana National Petroleum Corporation (GNPC) entered into a Memorandum of Understanding (MoU) with the supermajor’s Ghanaian subsidiary: ExxonMobil Exploration and Production Ghana (Venture) Limited, for acquisition of Petroleum Exploration and Production rights over the Deepwater Cape Three Points (DWCTP) Block, located in ultra-deepwater zone of between 2,000 and 4000 metre water depths in the prolific Tano basin.

“Pursuant to the terms of the MoU, the parties agreed to negotiate in good faith a Petroleum Agreement, with exclusivity period of seven months”, the Ministry of Petroleum said.

The discussions, in the event, have gone on far beyond the seven month exclusivity period and ExxonMobil has managed to get the Ministry’s nod, in large part because Ghana desperately feels that the presence of such a super major in its petroleum industry validates the country’s hydrocarbon potential. “Ghana is one of a few African oil producer countries without the presence of a super major”, the Ministry of Petroleum declares, welcoming the entrance of ExxonMobil.

The DWCTP Block has twice been relinquished in the past: by Vanco Energy (which became Pan Atlantic) and Lukoil, the Russian explorer. “It is one of the ultra-deepwater blocks which severely test the limits of modern technology and would take Research and Development to optimally develop and exploit any discovered resources”, said a newspaper advertisement by the Petroleum ministry.

ExxonMobil has been trying to get into Ghana for close to a decade, since the Anadarko/Kosmos Energy partnership discovered the Mahogany field in 2007 and established Ghana’s place on the hydrocarbon map of the globe. Indeed, the company and the country clashed in the early 2010s, as ExxonMobil worked on the possible purchase of Kosmos Energy’s portfolio in the country. Ghanaian authorities protested about being left out of the discussion and accused Kosmos of handing over the country’s exploration data to a third party without going through proper procedure.


Cameroon, Egypt To Launch Licencing Round in 2018

President Paul Biya will take advantage of the Cameroon Oil & Gas Summit 2018 to be held in the capital city of Yaoundé from 6-8 February 2018, to launch the country’s next licencing round.

The summit is being organised with the official support from the country’s Ministry of Industry, Mines & Technological Development.
Meanwhile, Egypt says it will launch a lease sale for blocks in the Red Sea, after an ongoing seismic acquisition programme is concluded in the area. The launching is expected to take place before the end of Second Quarter 2018.

Cameroon and Egypt differ widely in their approaches to acreage licencing.

Whereas the Cameroonian government prefers negotiations, which means that this proposed bid round is out of the norm, Egyptian authorities could be described as perennial bid rounders.

In Cameroon, next February, the blocks on offer will be from the eight blocks that are not currently being operated. They include Etinde Exploration, Kombe Nsepe, Tilapia, Ntem, Elombo, Bolongo, Bomana Exploration and Bakassi.

In Egypt, the blocks that will come on offer depend on the results of the 10,000 km 2D long-offset broadband multi-client TGS-NOPEC and Schlumberger project, which commenced in mid December 2017. The project will comprise acquisition of a seismic survey. Advanced new acquisition and imaging techniques will provide better illumination of complex subsalt structures. The project will integrate all legacy seismic and non-seismic data. Acquisition commenced mid-December 2017 and is expected to complete in late Q1 2018.


Equatorial Guinea Is Excited About Only Four

By Sully Manope

Equatorial Guinea is not expecting all the seven companies which won acreages in its last bid round to get up to speed with their proposed work programmes.

The country’s oil patch is littered with stories of several companies which picked up assets and did not implement a robust work programme, let alone drill a single well, even though they were obligated to, for, in cases, close to a decade.

Which is apparently why Gabriel Mbaga Obiang Lima, the Minister of Petroleum, chooses to talk up only the companies that he sees, with their track records, are more likely to do the work.

In three conferences in the last three months, he has talked excitedly about Kosmos Energy’s entry into the country, ExxonMobil’s sign-on into a new acreage and Ophir Energy’s winning of Block EG-24.

Of these three companies, only Ophir got its own new block through the process of the last bid round. Kosmos got EG-21, S and W by discretionary awards and bought out Hess from the Ceiba and Okoume fields. ExxonMobil got Block EG -11 also by negotiations with the authorities.

Equatorial Guinea knows that there are questions around the other six (apart from Ophir), who won in the bid.Atlas Petroleum, which is partnered with South Africa’s Strategic Fuel Fund for Block EG-10, is well known for sitting on assets without taking them any closer to drilling, let alone development.

Given its pedigree in EQ Guinea, where it sat on Blocks until bigger independents came in to farm in at least five years after it had been awarded the acreages, it is surprising that it won this time again.Atlas Petroleum has repeated this pattern all over Africa.

Offshore Equator Plc, which won Block EG-23 is unknown; Taleveras, which picked up Block EG-07, is an oil trader trying to feel its way upstream. Its oil trading business is not anywhere on the scale of Vitol or Glencore, who have been acquiring upstream acreages too, but have the deep pockets to purchase upstream technical expertise.

Elenilto won Block EG-09. It’s an Israeli group involved in a range of activity from real estate to renewable energy, is relatively a novice in oil and gas. Its only hydrocarbon asset is the Senegal Offshore Sud Shallow Block (SOSSB), on which it has announced no work programme. One company that looks, from a distance, a little earnest is Clontarf Energy, which won Block EG-18.


Can Small Savannah Petroleum Stomach The Swallow of Seven Energy?

By Jackson Otiti

Watching the presentation of the entire portfolio of Savannah Petroleum at the Africa Oil Week in Cape Town last October, it was hard to believe that this small, frail company was the one trying to acquire Seven Energy’s assets in Nigeria.
“We saw an opportunity to acquire producing oil and gas assets in Nigeria”, Steve Jenkins, the company’s non-executive chairman, told the audience, “and we are having a conversation”.

Savannah’s entire assets consist of two undeveloped permits in Niger Republic, where there is no evacuation infrastructure for exporting crude. Niger Republic’s entire production (20,000BOPD) is refined in the country’s only Refinery. Savannah’s largest shareholders are Fidelity International Limited, Andrew Knott, Standard Life Investments Limited and Capital Group Companies, Inc, not the most bespoke of investors, combining around 34% equity.

Savannah has talked up its MoU with the New Nigeria Development Company NNDC, a company owned by 19 Northern states of Nigeria, to collaborate on the Nigerian section of the Central African rift system (CARS). Keen observers of the Nigerian oil industry know that the NNDC’s so called partnership with the Nigerian state hydrocarbon company NNPC does not carry significant value.

On the contrary, Seven Energy owns over 200 kilometres of natural gas pipeline; the company constructed and owns the dominant equity in a 200MMscf/d gas processing plant, from which gas is supplied to two power plants and a cement company. It also has equity in two marginal fields: 40% in the Uquo gas field (90MMscf/d, 50BCPD), operated by Frontier Oil and 31.875% in Stubb Creek oil and gas field, both onshore South eastern Niger Delta basin. Seven Energy is a Strategic Alliance partner, entitled to equity crude, in three Seplat operated acreages in mid-western Niger Delta which produce, at peak, in excess of 70,000BOPD.

The company’s debt burden, exacerbated by the difficult Nigerian domestic gas market, has however been so overwhelming that Seven Energy has struggled to breathe.

So that, in spite of the gap between it and this very junior, AIM listed suitor, there is already an agreement.
Seven Energy reports that Savannah will acquire substantially all of its valuable assets, including, at its option, the Strategic Alliance Agreement, which are to be transferred to Savannah, its subsidiaries, or an entity to be nominated by Savannah, subject to completion of a financial restructuring of the Group in accordance with the Term Sheets (see Seven Energy website) which says, among others, that new capital will be provided by Savannah with funding available for, amongst other things: (1)operational working capital and the liquidity needs of the target Group; (2)cash consideration to be paid to selected creditors, including the SSN Noteholders and (3)costs associated with the Agreed Transaction.

The SSN Noteholders will receive their pro rata share of (i)$52.5Million in newly-issued equity in Savannah and (ii) an US$87.5Million cash payment, in consideration for the discharge of all $318.2MillionSSNs and release of claims against the entities being acquired by Savannah (together the “SSN Consideration”) (with further principles set out in the relevant Term Sheet); In addition to the SSN Consideration, the SSN Noteholders shall also be offered the right to subscribe, on a pro rata basis to their holdings of SSNs, for $25Million worth of newly-issued equity in Savannah for a total cash consideration of $20Million (the“Equity Issuance”).

The Equity Issuance shall be fully underwritten by VR Capital and each SSN Noteholder may specify an amount of shares up to its pro rata share it is willing to subscribe for as part of the Equity Issuance. SSN Note holders who participate in the Equity Issuance shall also be entitled to a share, on a pro rata basis to their participation in the Equity Issuance, in a $20Million New Accugas Holdco Facility (as defined in the relevant Term Sheet), for which (other than in certain circumstances) no cash consideration shall be payable by the SSN Noteholders (as described more particularly in the relevant Term Sheet and the Steps Plan).

Savannah may choose, in certain circumstances, to exchange entitlements in respect of the Savannah equity and the Equity Issuance into additional cash consideration (i.e. gross subscription price minus transaction costs resulting in a net cash value of 96c in the dollar) (as described more particularly in the relevant Term Sheet); The 10.50% Notes will be exchanged such that the 10.50% Noteholder will receive $15Million of new notes issued by Accugas Holdco (as defined in the Lock-Up Agreement) and $85Million of newly issued notes issued by Seven Uquo Gas Limited, in each case to be serviced and repaid in Nigerian Naira (converted from USD at the prevailing NAFEX rate) with extended maturities and lower debt service obligations than the 10.50% Notes (as described more particularly in the relevant Term Sheet and the Steps Plan); The Term Loan 1 Facility will be exchanged into a new $20Million facility issued by Accugas HoldCo (as defined in the Lock-Up Agreement); The Term Loan 2 Facility holder will receive (i) $4.4Million in newly-issued equity in Savannah and (ii) an $7.3Million cash payment, in consideration for the discharge of the Term Loan 2 Facility and release of claims against the entities acquired by Savannah (assuming the SAA is not reinstated (fuller details on Seven Energy website, with further principles set out in the relevant Term Sheet).


Nigerian Bid Round Unlikely Until 2018

By McJohn Opotobo, in Warri
The much anticipated 2nd licencing round for oil fields deemed marginal in Nigeria is unlikely to be inaugurated until 1st Quarter 2018.
There is a heightened sense of anxiety for the round, the first in 10 years, and dozens of companies are waiting for the announcement, but impeccable sources at the Ministry of Petroleum in the country’s capital Abuja dismiss the possibility of the anticipated inaugural statement being made any time in the next three months.
The Department of Petroleum Resources, the country’s regulatory agency, responded angrily to a newspaper report which cited some guidelines to the round last week including allusions that the authorities plan to set aside some of the oil acreages for discretionary awards to “individuals from the Niger Delta region”. The report, published Monday September 18, had indicated that such discretionary awards are “to ensure that people from the region own the oil assets, even if it means holding a separate bid round for Niger Delta-owned companies”.
Petroleum ministry sources who spoke with Africa Oil+Gas Report were not discomfited by the parts of the said newspaper report which indicated that interested investors will be required to pay $50,000 each for a Competent Persons Report (CPR), which, the newspaper wrote “will require bidders to provide details of their shareholding structure, names of their directors, track record in the oil and gas sector, audited financial statements, partnership and/or collaboration with indigenous firms, and financial resources to bid and pay for the oil acreages”. The ministry sources also did not contest the part that said that “after the CPR stage, investors will also pay $15,000 each as data mining fees to enable them gain access to the relevant data on the acreages that will be placed on offer”. They are, however vigorously upset about the claims that the guidelines include a plan to set aside some of the oil acreages for discretionary awards to “individuals from the Niger Delta region.” Fuller story here


Uganda’s Poor Outcome Highlights Africa’s Growing Bid Round Losses

By Toyin Akinosho

Whenever the Ugandan government awards a petroleum exploration licence and signs an oil production sharing agreement with Oranto Petroleum on the Ngassa area, as it expects to do in the coming week,it would be concluding its debut,31 month long, open acreage sale.

In the event, only two of the four companies that were granted the opportunity to take positions accepted to do so.

While Oranto of Nigeria and Armour Energy of Australia agreed to sign, Waltersmith and Niger Delta Exploration, both Nigerian companies, chose to walk out.

Incidentally, these two unsatisfied companies have far more hands-on experience in oilfield activity than the two who signed up (ref-Africa Oil+Gas Report, Vol 17, No 4, 2016).

And yet, Uganda’s is only the latest on the list of cases of poor outcomes of lease sales on the continent.
Angola, Nigeria, even Equatorial Guinea have suffered losses, both in relative and absolute terms, after drawn out bid round proceedings. Read the full article in the Vol 18, No 7 (September) 2017 issue of the Africa Oil+Gas Report.

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