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Circle Gets Closer To The Magical 10,000BOPD

Circle Oil, the LSE listed minnow, is inching close to 10,000 barrels of oil per day (BOPD) in its only producing concession on the continent. The company placed the Al Ola-1X discovery well, in Egypt’s NW Gemsa Lease, on stream after perforating an interval in the Kareem Rahmi sand and flowing at approximately 1,400 BOPD on a 28/64”choke. The overall production from the Geyad and Al Amir SE fields, on the same lease, was over 8,500 BOPD as of late December 2010. These production levels are now being managed to allow the planned water injection wells to be drilled and the waterflood to become fully operational. “As previously announced, for an interim period, production is expected to be 7,000-8,000 BOPD after which oil production levels will be systematically and incrementa1ly increased together with the planned gas production once the waterfiood is in full operation. Further development drilling is also envisaged with the drilling of Geyad-3.

The Al Amir SE-7X water injector was spud on November 27, 2010 and was drilling ahead (08:00 hrs, 19 Dec 2010) in the Belayim Formation at a depth of 2,645metres(8,677 ft) MD. This well was also planned to drill deeper to test the Lower Rudeis potential previously identified in wells A1 Amir SE 6 and Al Ola-1X.


Centrica Boss Moves On To SEPLAT

Stuart Connal, who, only last June was briefing the press about the changes in status of Centrica’s operations in Nigeria, is now working for SEPLAT. The former managing director of the Nigerian subsidiary of the British Gas company resumed as the Chief Operating Officer at the Nigerian Independent, around November 2010. He reports directly to Austin Avuru, SEPLAT’s CEO and Managing Director. Connal is well liked by the Nigerian media, who find him easily accessible and engaging.


CEES UIJLEN HOED, A BIO

A Dutch national with over 10 years of living in Nigeria. Married to a Nigerian lady from Onitsha. Three daughters who have all lived in Nigeria, but currently in The Hague (Holland) because there is no Dutch education in that West African country. They visit regularly.

Studied and graduated at University of Amsterdam where Cees read economics.

Joined Shell in 1982 and had a long career in general management and finance. Left Holland in 1985 to work in such places as Saudi Arabia, Chile, London (UK), Dubai and Nigeria. Was the Finance Director for Shell Petroleum Development Company of Nigeria in 2004/5 and subsequently took up the position of Finance Director for Shell in Africa (E&P). Moved to Dubai to become Finance Director for Shell in the Middle East, Caspian and South-East Asia. Left Shell in 2009 to return to Nigeria and join Sahara to become their Group CFO. In the middle of 2010, took on the responsibility of CEO/Managing Director of the upstream/E&P companies of Sahara with the prime objective to expand the E&P business both in Nigeria, the rest of Africa and the Middle East.


Can Cees Win The Bet On Sahara?

 “I will take your money”, the Dutch National warns a Nigerian journalist.

Minutes after Cees Uijlenhoed concluded a press conference in which he spoke of Sahara Energy’s plans to commence oil production by July 2011, a reporter walked up to him, held his gaze and challenged him to a bet.

Uijlenhoed, CEO of Sahara Energy Fields, the Nigerian independent, took up the challenge.

“Come back later in the year and I’d take your money”, the Dutch national responded.

At stake was whether Sahara Energy Fields would, indeed, deliver on the promise it was making: to commence, within the year, field development on Oki field, one of the four undeveloped discoveries in the Oil Prospecting Lease(OPL) 274, its 870km2 land acreage in the northwest Niger Delta Basin. Mr Uijlenhoed had admitted, in the course of the conference, that as of the last week of January 2011, there was no rig contract in place for the development, a fact which made the claim of likely oil production by mid year quite a stretch. The Oki structure straddles the NPDC operated Oziengbe south, a producing field which lies on adjacent acreage. This is supposed to be a low hanging fruit. But Sahara has other such opportunities strewn all over the 5,994km2 of onshore and offshore acreage in which it has interests in the Niger Delta basin. One is the Tsekelewu field, another oil pool straddling a producing field, which the company has held for more than five years without either re-entry, nor new drilling. Reasons proffered for the inactivity on Tsekelwu field include the excessive militant activity in the swamp terrain.

Still, Cees Uijlendoed, a former CFO of Shell E&P Africa, is nothing if not but optimistic about Sahara Energy Field’s prospects. He believes there is a significant opportunity for a “credible radically change in the next five years and the domination of IOCs will diminish”.

When someone tried to take advantage of his pedigree and steer him to a discussion about why Shell left Angolan deepwater in the early 2000s, Uijlendoed returned the topic back to Sahara Energy: “Look, that is a big company”, he says of Shell. “Here in Sahara, we are smaller and focused on more specific things”. It is Sahara’s objective to step into the vacuum likely to be left by IOCs, in Nigeria he argues. “But also outside of Nigeria, the concept of a privately owned, ‘fast decision making’, credible E&P company resonates with host Governments because Sahara is focused on its partners, builds the relationship and aligns its interest with host Governments, It is not hindered by global portfolio considerations and rankings, like the IOCs, which make Country X the flavour of the month in one year but fail them the next”.

Sahara Energy Fields Ltd, part of the Sahara Group of Companies, represents the E&P sector for the group and has extensive interests in onshore and offshore blocks in Nigeria and Ghana.

Mr Uijlendoed’s speech was peppered with a rosy account of Sahara Energy’s place in the sun and the value the company was bringing to the table in its joint venture agreement with Azimuth Limited, a private limited company “currently being registered in Bermuda”. A joint statement by the two entities declared that Azimuth had purchased a license to view, under certain terms and conditions, the global multi client data library of Petroleum Geo-Services ASA (PGS), which contains “150,000km2 of 3D seismic data and “21,500km of 2D seismic data across West Africa. Azimuth was drawing on a pool of 85 technical experts, and was well positioned to analyse E&P assets throughout Africa and to develop credible bids for acquiring attractive properties”, the statement added.

Sahara Energy says that it has plans for seismic surveys in its “highly prospective acreage onshore and offshere Nigeria”, to “enhance prospectivity and thereafter seek improved farmout terms for drilling”.

“The agreement formalises a partnership between the two companies throughout West Africa — from Mauritania in the north to Namibia in the South (the Area of Mutual Interest). To leverage the strengths of both partners, Sahara and Azimuth will pool resources and collaborate openly when identifying and acquiring attractive E&P acreage. Where possible, and as appropriate, the partners will seek to utilize PGS’ proprietary technology — such as the industry-leading “GeoStreamer” seismic acquisition system — when developing acquired acreage. In all cases, Sahara will act as Operator on behalf of the partners when such a role is required by the terms of relevant Petroleum Contracts”.

What is key is that Sahara is well known for acquiring acreages. Now is the time to work up their development, because it is in field development work that the real value is added, in the form of job opportunities in communities, building local skills, and providing onsite services that accelerate neighbourhood economic development. When a government like Nigeria’s chooses to award acreage to an indigenous company like Sahara, it is hoping that the company can build the capacity to develop those assets as a truly Nigerian company. It is Nigeria who ultimately wins the bet if Sahara Energy goes through as operator of the Oki field and delivers first oil in good time as a Nigerian company.


Alen Comes On Stream In 2013

First production at Noble Energy operated Alen field, I Block “I”, off Equatorial Guinea, is estimated to commence by the end of 2013 at 37,500 Barrels of Condensate Per Day(BCPD) gross (18,750 barrels per day,  net to Noble). Natural gas reinjection is estimated to be 380 Mmcf/d during gas-recycling. The total cost of development is estimated at $1.6 billion ($735 million net).

The field development plan was approved by the Equatorial Guinea’s Ministry of Mines, Industry and Energy in early Januay2011. Noble Energy’s  board of directors sanctioned the project in December 2010, followed closely by the approval of all partners, including the Nigerian independent Atlas Petroleum (27.55%), UK’s Glencore Exploration (23.75%), Osborne Resources limited, a company within the PA Resources Group(5.7 %) as well as the government company GEPetrol, with a 5% carried interest in Block “I” . Formerly known as Belinda, Alen is a liquid-rich gas-condensate field and was Noble Energy’s first operated discovery in the Douala basin. The reservoir lies primarily in Block “O’ where the original discovery was made, and extends into the northern part of Block “I”. Noble Energy is Technical Operator of the project with an average working interest of 44.65%.

Initial field development will include three production wells and three subsea natural gas injection wells tied to a processing platform. Produced condensate will be separated and piped to the Aseng floating production, storage, and offloading vessel on Block “I”, approximately 24 kilometres to the south, where it will be held until sold. Associated natural gas will be re-injected back into the reservoir to maintain pressure and maximize liquid recoveries. The Alen processing facility will be located in approximately 85 metres of water and is designed to handle 440 million cubic feet per day (Mmcf/d) of natural gas and 40,000 barrels per day (BPD) of condensate.

The Company expects to recover gross condensate of approximately 88 million barrels. In addition, there is an estimated 930 billion cubic feet of gross natural gas resources at Alen that will ultimately be produced as part of Equatorial Guinea’s integrated gas monetization project. Natural gas handling capacity at Alen is being planned for significant expansion as part of the gas monetization project.

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Akinlawon Is SPE Chairman

Adeyemi Akinlawon has taken over as Chairman of the Nigerian executive council of the Society of Petroleum Engineers(SPE), a global organisation. It’s a big step from his being Vice Chairman,  Chairman – Elect 2009/2010. He was Steering Committee Member of the SPE Applied Technology Workshop on Lessons Learned in Deepwater Field Development in the Gulf of Guinea, Abuja,  Nigeria, held in December 2008.

Akinlawon participated as a Mentor in the SPE e-Mentoring Programme in 2007 and was also Chairman, Technical Papers Committee, SPE Nigeria Annual International Conference & Exhibition (NAICE). His day time job is as Manager, Gas Commercial at Chevron Nigeria. He has more than twenty- six years experience in the Oil and Gas industry, starting as a Graduate Assistant with the Department of Petroleum Engineering of the University of Ibadan in August 1983 after which he joined Texaco Overseas (Nigeria) Petroleum Company Unlimited (TOPCON) in April 1984, as a Petroleum Engineer. He worked with TOPCON up till December 2001, in several positions and increasing job responsibilities as: Petroleum Engineer, Reservoir Engineer, Senior Petroleum Engineer, Engineering Supervisor, Assistant Engineering Manager and Manager, Project Development before transferring employment to Chevron Nigeria Limited (CNL) in January 2002 after which he worked as Coordinator, Gas Commercialization and Manager, NNPC/DPR Relations (Deepwater & PSCs).


Africans Don’t Export To Africa

By Fred Akanni

Qf  the four top oil producing countries on the continent, only Libya exports crude oil to energy starved African countries.

Algeria doesn’t export to Africa. Neither does Angola or Nigeria, according to figures from the latest edition of OPEC Statistical Bulletin (See chart).

On the contrary, the much vilified Iran ships 127,000 Barrels of oil every day to African destinations. Saudi Arabia does a little more, exporting 165,000BOPD) to needy countries in the east and west of the continent.

Nigeria, which is Africa’s largest producer, delivers almost half of her crude to North America (1.42MMBOPD) and sells 652,000BOPD to Europe. It exports 85,000BOPD to Asia Pacific region, which includes the voracious China.

Angola exports around half of its crude production (933,000BOPD) to North America, with 300,000BOPD to Europe. This southwest African country exports 537,000BOPD to the Asia Pacific region. This confirms several commentaries that Angola is Africa’s largest crude exporter to China.

Algeria refines almost half of its production into petroleum products for domestic consumption and export. Of the remaining 744,000BOPD, the country sends 393,000BOPD to North America, 203,000BOPD to Europe and 125, 000BOPD to the Asia Pacific region.


Africa Misses Out On The Big M & A Season

By Mohammed Jetutu

Upstream Oil and Gas Asset Acquisitions were flat in Africa and Europe, while they surged in the Americas, helping to create a record global high of $l07Billion.

IHS Energy, the global firm of hydrocarbon industry scouts, reports that deal value for oil and gas assets increased 160 percent above 2009 figures, driven in part by sustained high oil prices and global expansion by national oil companies

But where as Asset transaction value more than doubled to $59 billion in North America in 2010, and more than tripled to $18 billion in Asia-Pacific, there was comparatively far less dealing in Europe, Africa, the Middle East, and the Former Soviet Union. The preliminary results in the IHS Herold 2011 Global Upstream M&A Review, released

IHS Energy, notes that the big asset sale was driven by spending by:

  • National oil companies,
  • Major divestiture programmes by BP (to pay for the Macondo oil spill),
  • ConocoPhillips,
  • Suncor Energy and
  • Devon Energy, as well as
  • Major joint ventures focused on North American unconventional resource plays.

“Total global upstream mergers and acquisition (M&A) transaction value, including corporate mergers, rose by $16 billion $160 billion” the report indicates, “although there were no corporate mergers greater than $10 billion in 2010”. Corporate transaction value retreated to approximately $53 billion in 2010 after spiking on the ExxonMobil – XTO and Suncor Energy – Petro-Canada mergers in 2009.

The report’s executive summary, which was released as of our going to press, didn’t give any comparable value on deals in Africa, nor provide analysis on M&A activity on the continent in any detail. Still, to get a sense of such oil and gas asset transaction in Africa in 2010, consider the example of BP’s $7Billion worth of sale of assets to Apache Corp., the American independent, in three regions of the world. Apache paid $6.35 billion for all the assets it acquired in the US Permian Basin and Canada, with $3.l bilion for Permian Basin portfolio and $3.25billion for the Canadian properties. In contrast, Apache paid $650 million to acquire four development leases and one exploration concession across 394,300 acres in Africa, specifically, Egypt.

Elsewhere on the continent, Shell, TOTAL and ENI collectively sold their equity in four leases in Nigeria for slightly less than $500Million. The biggest asset sale in Africa in 2010 was the acquisition, by Tullow Oil, of Heritage’s 50% stakes in Uganda’s Blocks 1 and 3A for $1.45Billion.

“There were three primary drivers that led to the record asset deal value,” said Christopher Sheehan, director of M&A research at IHS, “sustained strength in oil prices reinforced by growing confidence in the economy, large packages of attractive producing assets on the market, and low natural gas prices in North America. In 2010, many oil and gas companies moved to-restructure, refocus or expand their portfolios as an improving global economy engendered confidence in steady high oil prices. National oil companies seized the opportunity to purchase hard assets in a strategic expansion of their global natural resource holdings. In addition,” he said, “continued low North American natural gas prices provided attractive opportunities for well-financed new entrants to invest in shale and tight sands plays. At the same time, rising equity prices made the pursuit of corporate acquisitions more expensive.”

In spite of the significant rise in Asset transaction value in North America in 2010, the region’s share of total global upstream transaction value slipped to 54 percent in 2010 from 68 percent in 2009, (the 2009 value was inflated by corporate mergers). While North American activity in 2010 was dominated by shale resource investment, including a more than 150 per- CPT cent year-on-year increase on U.S. as- set deal spending, ongoing regulatory uncertainty in the Gulf of Mexico following the deepwater Macondo spill led to only sporadic transaction flow there.

M & A Activity in Latin America Soared

According to IHS, the biggest increase in upstream transaction value was recorded in Latin America, where deal value soared to $29 billion, a milestone fueled by Chinese national oil companies expanding their upstream footprint in the Americas, including gaining access to Brazil’s immense deepwater pre-salt resources. To put this phenomenal growth in perspective, Latin America accounted for 18 percent of the worldwide upstream transaction value in 2010 – skyrocketing six-fold above the 2009 transaction value that represented just three percent of the global total.

Even so, in total, the volume of distressed assets on the market dampened deal pricing gains in 2010 compared with the previous year. Weighted, average oil and gas proved-reserve deal-pricing rose to $10.59! per barrel of oil equivalent (boe) in 2010 from $9.72/bee in 2009. Deal pricing for proved, oil-weighted transactions increased to $9.78/BOE in 2010 from $8.48/BOE in 2009. In the U.S., deal pricing for proved, oil-weighted transactions increased sharply from $12.72/BOE in 2009 to $16.51/BOE in 2010. Despite persistently weak natural gas prices, gas-weighted, proved reserve deal- pricing in the United States (the world’s most liquid upstream M&A market) actually rose slightly from $11.26/BOE in 2009, to $11.79/ BOE in 2010.

Transactions for Unconventionals Remained Robust; National Oil Companies Accounted For More Than 20 Percent of Global Spending Unconventional resources represented more than one-third of total worldwide upstream transaction value, or $57 billion, in 2010. This high figure is steady with 2009 values, which included more than $30 billion attributable to the ExxonMobil – XTO merger. The major trends surrounding unconventional resources in 2010 were a near doubling of assets deals focused on tight gas plays and a more than tripling of transactions focused on the Canadian oil sands.

“The Canadian oil sands assets,” Sheehan noted, “were more attractive to international investors due to the combination of improved project economics boosted by higher crude oil prices, and a welcoming climate for cross-border M&A by the Canadian government.”

NOCs and sovereign wealth funds (SWF) dramatically increased their acquisition of global upstream assets to feed their rapidly growing economies in 2010. Total NOC and SWF transaction value reached $32 billion or 20 percent of the global total in 2010, which was up from 13 percent of worldwide transaction value in 2009. Total global purchases by the Chinese NOCs increased from $14 billion in 2009 to $26 billion in 2010.

For more information on the IHS Herold M&A Database and transaction analysis, please contact sales@herold.com. To speak with IHS analyst Christopher Sheehan regarding the IHS Herold 2011 Global Upstream M&A Review, please contact, melissa.manning@ihs.com, or press@ihs.com.


…Addax “Contributes” Two

Edward Skene, until recently GM, Business Services at Addax Petroleum in Nigeria, has joined SEPLAT as the Chief Financial Officer (CFO). So has Bryte Oghor, who was GM HSE at Addax. Oghor will be overseeing a portfolio that includes Government and Community Relations.


Yanbu-Cairo Flights Won’t Compete With Ferry Service

It takes $240 to fly from Yanbu, in Saudi Arabia and Cairo in Egypt, on the Almasria Universal Airlines. The new route, approved by aviation authorities in the two countries, target mainly Egyptian expatriate workers in the Kingdom and Saudi tourists intending to visit Egyptian resorts.  The “one-flight daily”, launched in late December 2009, is clearly a very minor competition to the waterway traffic between Safarga and Dhuba ports in  Egypt and Saudi Arabia respectively. The latest ferry services between these  two ports was launched in July, with each ship capable of carrying 1,220 passengers. They are expected to reduce travel time between the two ports from eight hours to two hours and 15 minutes.  In contrast, the (current) total passenger capability of the Yanbu-Cairo flight is 158. Authorities say that the flights can be increased to four; as the number of passengers on the route is expected to increase during Hejj and Umrah seasons as well as in the summer.

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