11 companies left standing in second round
Shell Nigeria, the country’s largest operator and Transcorp, an ambitious firm controlled by the flamboyant “Afrocapitalist” Tony Elumelu, are two of the high profile companies weeded out in the first round of the bid for Chevron’s 40% stake in three Oil Mining Leases(OMLs) in Eastern Niger Delta.
The acreages are OMLs 52, 53 and 55, which contain proven oil and gas reserves of 555MMBOE, according to Chevron’s Information Memorandum, quoting the Nigerian Department of Petroleum Resources (DPR).
Also disqualified were Niger Delta Petroleum Resources, which entered the bid with South Atlantic Petroleum (SAPETRO); Oryx, owned by the Swiss investor Jean Claude Gandur; Frontier Oil, which just commissioned a large gas plant in the country’s south east and Pillar Oil, a marginal oilfield producer.
One surprising survivor is Sogenal Limited, which is neither known to have a large capital asset, nor has ever produced a single barrel of oil.
Two of the 11 remaining bidders in the current round are, expectedly, Seplat, Africa’s largest homegrown hydrocarbon producing company and First Hydrocarbon Nigeria, a local subsidiary of London listed Afren Plc. Three other survivors are Seven Energy, Britannia U and Amni International Petroleum. Seven Energy holds equity in a string of assets in the basin, including interests in Seplat operated OMLs 4, 38 and 41; Britannia U is the operator of the 2,200BOPD Ajapa marginal field in Chevron held OML 90, located in shallow offshore western Niger Delta. Amni has operated and non-operated assets in Southeast offshore Niger Delta and has invested heavily in some of the consortia who’d bought the country’s power generating companies.
The presence of Sogenal and Brittania U among winners of the first round has thrown up questions regarding how the winners were selected. “We put in over $700Million as bid, we are a producing company with some track record, and we bid for the three leases as a package, so we think we are eminently qualified”, says one company which claims it has stronger oilfield footprint than some of those who won.
The weeding was made after all the indicative offers were received on July 29, 2013, a month and half after Chevron kick-started the process by inviting 20 companies. Between June 15 and July 10 however, other companies had made it, kicking and screaming, into the bidders’ list, shooting the number to 36.
Shell’s willingness to acquire one of the acreages has been widely reported in the media. The move is considered extraordinary, coming from a super-major. As a rule, companies interested in acquiring acreages from which majors are divesting in Nigeria are local firms and international independents, often as consortia. But Shell’s interest highlights the fact that the company is interested in large gas reserves to feed its ever growing impetus to export natural gas around the world. Shell and Chevron have for the past six years worked on joint field development plans for the straddling gas reservoirs in the Ohaji South field in Chevron’s OML 53 and Assa North pool in Shell’s OML 21. As such, Shell’s bid was for OML 53, which reportedly holds proven reserves of 299MMBOE (source again: Chevron’s Information Memorandum, quoting the Nigerian Department of Petroleum Resources (DPR)). It is not clear whether the Shell bid was rejected for its low price (reportedly $100MM) or because the company did not bid for the three blocks as a package, which Chevron would have preferred.
The second round bidders are currently in the Chevron data room in Houston, doing a more exhaustive evaluation of the assets than the Information Memorandum- on which the indicative offers were made- allowed.