All articles in the Farm in, Farm Out Section:

Uganda’s Licencing Round Unravels

Two of the four companies that won the three acreages awarded at the close of Uganda’s 2015/2016 licencing round have discontinued with the process.

Waltersmith Petroman Oil Limited, awarded the 425 km2 Turaco Block in Ntoroko District, has opted out because of what it calls “unfavourable terms”.

Niger Delta Petroleum Resources(NDPR), which was paired with Oranto Petroleum International on the 410 km2 Ngassa block in Hoima district, said from the onset that it did not want to do get into the block unless it was granted operatorship. The company hasn’t had a conversation with any Ugandan official in the last four months.

Follow this link for fuller details of the report.

S/Sudan Opens Up Blocks B1 and B2 To Negotiations

Talks With TOTAL &Co Collapse

South Sudan’s Ministry of Petroleum says it welcomes the interest of investors for direct negotiations on oil and gas in blocks B1 and B2. The announcement comes after negotiations broke down with the French oil and gas company Total E & P due to irreconcilable differences. 

Officials of the Ministry of Petroleum met with representatives of the French major TOTAL in Kampala, Uganda between April 10 and 21, 2017. Also involved in the negotiations to develop an exploration and production sharing agreement (EPSA) for the blocks (B1 & B2) were UK independent Tullow Oil Private Limited Company and the Kuwait Foreign Petroleum Exploration Company (KUFPEC). The negotiations reached an impasse over the proposed exploration period and cost recovery limit. 

“Following lengthy discussions with representatives of the company Total we have decided it is in the best interest of South Sudan to open opportunities to other potential investors,” said Ezekiel Lol Gatkuoth, Minister of Petroleum of South Sudan. “We had hoped for a favorable outcome but we believe these large and highly prospective blocks need a fast and ambitious development program to achieve their full potential. B1 and B2 are now open for direct negotiation.”

Blocks B1 and B2 were once part of the 120,000 square kilometer area known as Block B, which was divided into three licenses in 2012. The area is highly rich in hydrocarbon deposits but has experienced very little exploration. In March 2017, Pan African independent Oranto Petroleum Limited signed an exploration and production sharing agreement (EPSA) with the Government of South Sudan for Block B3. The area covers 25,150 square kilometers and has estimated reserves in place of more than 3 billion barrels.

“The resource base in these blocks are enormous and we need committed operators who are ready to invest and work with our government to comply with the laws of our country,” said the Minister. “South Sudan is creating an enabling environment for companies to operate. We want companies to invest, explore, produce and we are ready to offer incentives to investors.”
The Government of South Sudan has adopted a very pro-business stance with the expectation that aggressive investments in the petroleum sector will stimulate the economy. In 2017, the Ministry of Petroleum announced it was planning to double its total oil production by next year. South Sudan currently produces 130,000 barrels per day but can produce as much as 500,000 barrels per day. 

The Ministry of Petroleum invites companies to negotiate directly on Blocks B1 and B2. Government officials will be present at the Africa Oil & Power conference in Cape Town onJune 5, 2017 to advance discussions with interested parties.

Nigeria’s Marginal Field Bid Round May Be Launched in September 2017

Minister of State prefers to kick start the process at the OTC in May 2017
Nath Ojugbajue, in Abuja

The Nigerian Government is unlikely to have a full auction of all open exploration blocks in 2017, if the Petroleum Industry Bill (PIB) legislations are not passed before the end of the year, but the Minister of state for Petroleum thinks he can at least go ahead with a bid round for marginal fields.
“He is eager to get a bid round done this year”, sources at the Ministry of Petroleum (MoP) affirm, “but the one without any inhibition is the marginal field round”.

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ENI Wins More Assets In The Tano Basin

Africa’s leading hydrocarbon producer has snagged more assets in a prolific part of the continent’s deepwater.
Italian explorer ENI has been awarded 90% interest in two new exploration blocks, in the Ivorien part of the Tano basin, which has proven commercial in nearby Ghana.

With this March 2017 acquisition of Cote d’Ivoire’s CI-101 and CI-205, covering an area of approximately 2,850km², ENI is following up on its acquisition, in 2016, of the Cape Three Point Block 4, in the same Tano Basin, in neighbouring Ghana.
ENI’s interest in Cote d’Ivoire’s segment of the Tano basin suggests that the company is evaluating the entire Basin, which straddles the two countries.

Ghana and Cote D’Ivoire have dragged themselves to court over oil production in this basin, with Cote d’Ivoire arguing that it is entitled to some of the oil being produced in Ghana’s TEN cluster of fields (operated by Tullow).

Whereas ENI’s Cape Three Point Block 4 is an exploratory tract, the company is developing another block in Ghana. The Sankofa-Gye-Nyamme project in the Offshore Cape Three Points (OCTP) is expected to come on stream by the third quarter of 2017, delivering, at peak, 45,000BOPD of oil and 180MMscf/d of gas.

ENI will operate the two newly awarded blocks in Cote d’Ivoire, with remaining 10% stake owned by Petroci, the state-hydrocarbon company.

NPDC Annexes OML 13

The Nigerian government awards a block outside the process of a bid round..

The Nigerian Petroleum Development Company (NPDC) has been awarded the Oil Mining Lease (OML) 13, in the south east onshore Niger Delta.

The 1,923 sq km block used to be operated by Shell, but was revoked along with a number of other blocks in 2005. Shell went to court, but ultimately gave up the asset.

It is not clear why such a petroleum producing property was awarded outside of the process of a bid round. OML 13 hosts the Utapate South and Ibibio fields, as well as a string of producing marginal fields including the Frontier oil operated Uquo, a gas accumulation and the 2,000BOPD Qua Iboe, operated by Network E&P.

NPDC is the operating subsidiary of the state hydrocarbon company NNPC and as an operating company, it is subject to the same laws of the country as any operating company.

Although the extant petroleum laws of the country allow the Minister of Petroleum to award Oil Blocks on discretionary grounds, the current bills at the Senate and the House of Representatives are in favour of competitive bid rounds as the way to grant assets to E&P companies.

“I can’t exactly comment on your query”, said Ndu Ughamadu, NNPC’s spokesperson, when asked about the award. “As you know, matters such as this are currently being discussed at the hearings of the National Assembly in Abuja and the DPR (industry regulator) is involved”.

What makes the award to NPDC more intriguing is the fact that the government has signaled intention to declare a transparent lease sale sometime in 2017, so why the hurry?

VOG Adds Bomono to the Douala Gas Network

Victoria Oil & Gas (VOG) Plc is on course of extending its gas network in Cameroon to include gas to be produced from the Bomono production sharing contract (Bomono PSC).

The company signed a farm-in agreement with Bowleven plc, operator of the Bomono PSC, which allows that gas produced from the Bomono PSC will be fed into the customer distribution network owned and operated by Gaz du Cameroun S.A. (“GDC”), a wholly owned subsidiary of VOG.

In the event, VOG will have 80% working interest in Bomono PSC.
VOG currently runs a 7Million standard cubic feet of gas per day (7MMscf/d) network which feeds power plants and industries in the city of Douala, the commercial hub of Cameroon.

“First gas supply to the GDC network is anticipated to start following granting of a Provisional Exploitation Authorisation (“PEA”) and other approvals”, Bowleven notes in a statement. “This Agreement, which has been negotiated by the parties over several months, aligns Bowleven’s intention of realising near term value from Bomono through commercial production of its Bomono gas deposit with VOG’s business of commercialising local onshore gas deposits using its established gas infrastructure and customer network”, the company explains, adding: “The transaction provides the ability to minimise the timescale to first production and optimises the proven advantages of Bowleven’s upstream expertise and VOG’s established gas supply business that feeds a diverse range of industries and the local power grid.

The initial plan is that gas currently suspended at Moambe be brought onstream and that further drilling be considered to supply the growing domestic market in and around the Douala area.

Farm Out Highlights
On completion, EurOil Limited (“EurOil”), a Bowleven subsidiary, will have a 20% working interest in the Bomono PSC and GDC Bomono S.A. (“GDC Bomono”), a wholly owned VOG subsidiary, will have an 80% working interest.
Bowleven will remain as operator of the project.

Gas from Bomono PSC will be sold to GDC less a tolling fee. The gas price paid will be a weighted average received by GDC for its total domestic sales less a tolling fee for use of the pipeline network.

The pipeline connection from the Bomono PSC to the main network will be managed and funded by GDC. GDC Bomono will complete the civil engineering works necessary for the gas processing plant installation at the Bomono site. The estimated capital cost for these works is US$6 million.

Bowleven has agreed to pay GDC Bomono 50% of any deficit, limited to a maximum payment of US$2 million, if the first 3 years of net income received by GDC Bomono is less than the development expenditure incurred.

EurOil will receive a 3.5% royalty from GDC Bomono’s production share of hydrocarbons, with an aggregate cap limiting the total royalty payments to US$20 million.

Bowleven will, on completion, also receive £100,000 worth of new ordinary shares in VOG based on the volume weighted average share price 10 days preceding the date of the Agreement, being 69.23 pence per share. It is the intention of Bowleven to retain these shares initially, but keep that decision under regular review as there are no restrictions on their disposal.
Asset Details:

The farm-out transaction relates to the Bomono PSC, onshore Cameroon. EurOil is operator of the Bomono PSC.

Bowleven completed extended well flow tests on the Moambe well that exceeded 7mmscf/d. The Moambe and Zingana exploration wells drilled at Bomono were then suspended as future producers.

As previously announced by Bowleven, the detailed prospect inventory prepared indicates there is 146bcf and 263bcf of mean un-risked GIIP in the Tertiary and deeper Cretaceous reservoir intervals respectively.

Additional Transaction Details:
The economic effective date of the transaction is 1 January 2017.
The above interests are expressed prior to the exercise of any back-in rights by the Cameroon State. Under the terms of the Bomono PSC, the Cameroon State has the right to take a 10% participating interest in development activity undertaken under an exploitation authorisation.

Completion is subject to, amongst other things:
The grant of a PEA over the Bomono PSC. The PEA application was submitted by Bowleven to the Cameroon authorities as requested following Ministerial approval for the award of a two-year extension to the Bomono PSC (to 12 December 2018);
The approval by the Cameroon Government of the assignment of the equity interest from EurOil to GDC Bomono; and
Should these conditions precedent not be satisfied by 30 June 2017, both Bowleven and VOG have the right to terminate the Agreement.

In the event that any of the resolutions requisitioned by Crown Ocean Capital P1 Limited at the forthcoming Bowleven General Meeting on 14 March 2017 are passed, VOG has the right to terminate the Agreement.

Africa: Deal Flow Returns in Full In 2017

BP and TOTAL to finalise over $3Billion worth of acquisitions

Africa’s E&P deals, which sank into historic lows for most of 2016, picked up at the tail end of that year and have been on an upward trajectory in the first two months of 2017.

BP’s December 2016 deal with Komos in Northwest Africa involves $916Million if every condition is actualised. The British major is to acquire a 62% working interest, including operatorship, of Kosmos’ exploration blocks in Mauritania and a 32.49% effective working interest in Kosmos’ Senegal exploration blocks. BP will pay $162Million upfront, it will spend $221Million carrying Kosmos’ E&A activities in the blocks and $533Million in developing the gas field Tortue, discovered by Kosmos in 2014.

Rosneft, the Russian player, agreed to spend $1.125Billion to purchase a 30% interest in the theShorouk concession offshore Egypt, which contains the super-giant Zohr gas field, from the Italian firm ENI.

This followed BP’s November 2016 decision to grab10% interest in that sae Egyptian asset for $375MM.
So, whereas only $973MM had been spent on E&P deals in Africa between January and October 2016, BP alone was committed to spending $1.231Billion to farm into assets in Senegal, Mauritania and Egypt. And Rosneft is spending $1.125Billion.
The French major TOTAL started the new year by announcing its agreement with Tullow Oil to pay $900Million for 21.57% of Uganda’s Albert basin development project. This leaves Tullow with 11.73%.
In the space of two months, three European companies have committed to spend $3.316Billion to farm into assets in four countries.

Over 90% of this amount ($2.953Billion) is to acquire near term assets, comprising $553Million for the Tortue gas project in Mauritania, $1.5Billion for the Zohr development in Egypt and $900Million for the Albertine Basin oilfield development.
These purchases are expected to be concluded between the first and second quarters of 2017 with consent of the authorities in these countries.

Oando Sells Rig Company To Its Managers

Oando Plc has agreed to a Management buy-out of Oando Energy Services, the Plc’s subsidiary involved in rig contracting and oilfield services.

In effect, the management of Oando Energy Services are paying for 60% of the company, with Oando Plc holding 40%. It is not clear, as of the time of writing, how much the deal cost.

Oando Plc formally elected to become a pure E&P company in December 2015, proposing to sell significant equity in everything other than the hydrocarbon acreages it holds.

It specifically requested Shareholders to approve, on December 7, 2015, the sale of the entire Oando Energy Services (OES) Limited, a 16 year old subsidiary which owns and operates four swamp rigs, all of which are currently without work. Oando claims that it invested over $450Million in the acquisition refurbishment and upgrade of these idle rigs, including OES Passion, OES Integrity, OES Professionalism, OES Teamwork and OES Respect. Also up for sale were the oil service segments of OESL, which include Drilling and Completion Fluids Services as well as Drill Bits and Engineering Services.

OESL is the last of the non-acreage holding, non E&P licenced subsidiaries that Oando has sold. Oando Plc sold 51% of the voting rights and 60% of the economic rights of its filling station and petroleum products business to trading house Vitol and Helios Investment Partners for $276MMin 2015. In September 2016, it agreed to sell 49 per cent equity stake in its midstream subsidiary, Oando Gas and Power (OGP) Limited to a new major investor for $115.8Million to a Special Purpose Vehicle (SPV) owned by Helios Investment Partners LLP (Helios).

Much earlier, Oando sold out of the 10 Megawatt (MW) Alausa Power Limited (ALPL), the conception of a Power Purchasing Agreement between the company and the government of Lagos State, Nigeria’s economic powerhouse. The company s also sold its share of Akute Power Limited, a project company set up to develop and operate a 12.15MWIndependent Power Plant (4Nos. 3MW gas-fuelled engines) for Lagos Water Corporation.

BP in an Acquisition Binge across Africa

By Fred Akanni

Less than a month after it plunked down $375Million to take 10% of the massive Zohr (30Tcf of Gas in place) offshore Egypt, BP is back on the market, snapping up acreage in the Senegal Mauritania basin.

The European giant had earlier signed off on a sales and purchase agreement to lift 100% of the LNG produced by the ENI-operated Coral South Floating LNG facility, which is expected to be installed offshore Mozambique.The agreement covers the purchase of LNG for over 20 years.

Now BP says it is investing nearly $1Billion mostly in the form of a multi-year exploration and development carry to acquire a 62% interest and operatorship of Kosmos Energy operated offshore Blocks C-6, C-8, C-12 and C-13 in Mauritania and an effective 32.49% interest in the Saint-Louis Profond and Cayar Profond blocks in Senegal.

At a time of low prices, this is huge.

But while the investment in the Egyptian asset is clearly close to profit, the Senegal/Mauritania buy-in is a significant gamble.

Zohr, which was discovered by ENI in July 2015, is currently being developed for the Egyptian domestic gas market, and the government has been paying regularly, with good prices too, at least $4 per Mscf (thousand standard cubic feet).

Prospects in the Senegal/Mauritania basin have lately described by petroleum geoscientists as ‘The Promise of the Northwest African margin’. Kosmos has encountered what it describes as over 15Tcf of gas off Mauritania. Its next plan is to search for oil in deeper water outboard this discovery. And that is one place where BP comes in, with the cash. BP is also interested in the gas part of the value chain. ”The approximately 33,000 square kilometres of acreage covered by today’s agreements includes the Tortue field, estimated by Kosmos to contain more than 15Tcf of discovered gas resources.

The total acreage, by Kosmos’ estimates, could contain roughly 50Tcf of gas resource potential and in excess of 1Billion barrels of liquids resource potential.

“We believe our expertise in integrating the gas value chain, together with a talented exploration partner in Kosmos, along with the support of the Mauritanian and Senegalese governments brings together all the elements needed to create a new LNG hub in Africa, ” BP says in a release. “In order to reduce development time and drive capital efficiency, the partners plan to process and transport the gas from Tortue at a near shore LNG facility. The proposed complex could be expanded in phases to accommodate future gas discoveries.

Under the terms of the agreements, BP and Kosmos have also agreed that Kosmos will remain the technical operator for the exploration phase of the project and drill three new exploration wells beginning in 2017.


Panoro Takes Yinka Folawiyo To Court

Says “No” To New Aje Well… “The Norway based minnow has struggled to pay its cash calls”
Oslo listed explorer Panoro Energy has commenced dispute resolution proceedings with the OML 113 joint venture partners by filing a request for arbitration with the Secretariat of the International Chamber of Commerce. The proceedings are taking place in the English High Court.

“The dispute concerns the purported passing of resolutions by the joint venture partners with respect to a proposed new well to be drilled at Aje in OML 113, and a related cash call”, the company explains.
“While Panoro has the financial ability to fully meet the amount of this disputed cash call, the Company believes the drilling of any new well is pre-mature at this stage”.

OML 113 is operated by Folawiyo Aje Services Ltd (FASL), a wholly owned subsidiary of Yinka Folawiyo Petroleum. It is made up of consultants and staff from the JV partners, who include New Age Exploration Nigeria Limited, EER (Colobus) Nigeria Limited, Pan Petroleum (Panoro Energy) Aje Limited and PR Oil & Gas Nigeria Limited.

Panoro Energy didn’t make it clear which particular well it is opposed to the drilling of. The facts in the public domain have always been that the partners will drill two new wells, Aje 6 and 7, after commencement of commercial production.

Aje field commenced commercial production in May 2016 after the completion of Aje 4 and Aje 5. Partners interviewed by Africa Oil+Gas Report say that Panoro has struggled to pay its share of cash calls “for some time now.”

Panoro says in its press release also of a firm view that the decision to incur such additional capital expenditures at Aje unambiguously requires unanimous consent of joint venture partners, which as such has not been taken in accordance with the Joint Operating Agreement procedure.

Panoro will seek to recover all losses, costs, expenses, compensation and damages in law and equity caused directly or indirectly by the joint venture partners’ breach of their contractual and equitable obligations. Panoro will also continue to take all necessary action to retain its equity participation in OML 113 and to preserve shareholder value. 

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