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Indians to Take over FAR’s High Profile Assets in Senegal

By Toyin Akinosho

FAR has finally found a buyer for its high profile oil and gas asset offshore Senegal.

ONGC, the Indian state hydrocarbon company, has agreed to buy the property, which includes FAR’s entire interest in the Production Sharing Contract for the Rufisque, Sangomar, and Sangomar Deep Offshore Blocks offshore Senegal and the relevant Joint Operating Agreement (the RSSD Project).

The Sangomar exploitation project, located in these blocks, is the largest offshore crude oil development currently under construction in Africa. Phase 1 development of the project, which will develop some 250Million barrels of oil, remains on track for targeted delivery of first oil in 2023. Production from this phase is expected to be around 100,000 barrels of oil per day (BOPD).

The Australia listed minnow, which has struggled as a going concern-and has defaulted on paying cash calls on the project- in the last two quarters, says it has entered into a Sale and Purchase Agreement with ONGC (full name ONGC Videsh Vankorneft Pte Ltd), the largest E&P company of India, which has agreed to pay FAR $45Million at completion. In addition, ONGC has agreed to reimburse FAR’s share of working capital for the RSSD Project from 1 January 2020 totalling $66.58Million, payable on completion. The reimbursement is comprised of cash calls paid by FAR, including $29.60Million paid to cure FAR’s default to the Joint Venture. The Transaction also includes an entitlement to certain contingent payments capped at $55Million.

The Transaction is subject to conditions precedent, including the following:

  • The written approval of the Minister of Petroleum and Energies for the Republic of Senegal to the transfer of the Transferring Interest to the Purchaser being obtained. FAR hopes that such approval would be obtained in January 2021.
  • RSSD Project Pre-Emptive Rights – The Transaction is conditional on the waiver or non-exercise of preemption rights available to FAR’s co-venturers in the RSSD Project. FAR is issuing the pre-emption notices between November 11 and November 12, 2020, and the co-venturers have 30 days to advise if they wish to exercise their right to preempt the Transaction on the same terms and conditions as ONGC. In the event of pre-emption, FAR will receive the same consideration as from ONGC.
  • FAR Shareholder Approval – ASX Listing Rule 11 requires that FAR obtains shareholder approval in relation to the Transaction. FAR intends to convene a general meeting of FAR shareholders as soon as practicable to be held in December 2020 to consider approving the Transaction (including if the sale is the subject of pre-emption).
  • Third Party Agreement Termination – The Transaction is subject to the termination or satisfactory resolution of an agreement between FAR and a third party, details of which are currently commercial in confidence. ONGC has the discretion to waive this condition.

Cath Norman, FAR’s Managing Director, describes the offer from ONGC as representing “the best option available at this time and we trust that our shareholders will vote for this transaction”. She reinstates the well-known fact that “the market for financing and selling assets has been weak since the impact of COVID was felt in March of this year”.

If the Transaction completes, the company anticipates, “FAR will be in a strong financial position and will be relieved of its future development obligations in relation to the RSSD Project, which in the absence of a sale, FAR cannot currently meet beyond December 2020”.

FAR expects to have approximately $130Million in cash at the close of this Transaction that, Ms. Norman says,” will be used to rebuild the Company and further our other West African prospects offshore the Gambia and Guinea-Bissau”.

Having been in the RSSD project for 14 years, “it’s a bittersweet moment to be selling our stake. FAR is committed to our projects in The Gambia and Guinea-Bissau and using our deep knowledge of the MSGBC Basin to potentially explore offshore Senegal again,” Norman declares.


DPR Waits on President Buhari’s Nod, to Announce Winners of Marginal Fields Bid Round

By Macson Obojemie, in Lagos

The Department of Petroleum Resources (DPR), Nigeria’s regulatory agency, is awaiting the approval of the Minister of Petroleum, to announce the results of the Marginal Fields bid round.

DPR concluded the analysis of the bids in the last two weeks and it has sent the results to the Minister of State for Petroleum, Timipre Sylva, who is to deliver it to President Muhammadu Buhari, the country’s defacto Minister of Petroleum.

The three and half month-long bid round exercise featured 52 fields and was concluded on September 15, 2020.

It was heavily subscribed; the largest number of bid applications in any hydrocarbon licencing sale in Africa in close to 10 years.

While the round started with over 500 applications, it closed with at least 100 applications making it all the way, each delivering at least $115,000 to the Nigerian treasury in the process.

And there will be more money heading to those coffers; when the results are announced, wining bidders have to pay signature bonus before the final awards. Analysts expect some highly contested fields, like Egbolom, to attract north of $5Million as signature bonus.

Nigerian marginal fields bid round is restricted only to locals.

Most applicants in this round, the second such formal round of its type in 17 years, were Nigerian independents who already produce crude oil and gas and are seeking to expand their portfolios. Others were Nigerian oil service contractors who now feel they should take positions in hydrocarbon acreages. Fuller story on the Bid Round is published in the monthly Africa Oil+Gas Report.


Dana Gas Sells Part of Its Egyptian Asset for $236Million

Sharjah based Dana Gas has formally announced the sale of its 100% working interests in the El Manzala, West El Manzala, West El Qantara and North El Salhiya onshore concessions and associated development leases in Egypt.

Dana Gas will retain its interests in its onshore and offshore exploration concessions, respectively El Matariya (Block 3) and North El Arish (Block 6), and will actively pursue maximizing the value of these assets.

The property on sale produced 30,950 barrels of oil equivalent per day, and contributed $38Million to the Company’s EBITDA in the first half of 2020, the company says. Transfer of ownership, responsibilities and staff to the buyer of the assets will take place upon execution and formal approval of the deeds of assignment for the various concessions.

The beneficiary of the sale is IPR Wastani Petroleum Ltd, a member of the IPR Energy Group to whom Dana Gas is selling for a consideration of up to $236Million. The two parties have entered into a binding agreement with including contingent payments. Under the terms of the sale, the consideration comprises (i) a base cash consideration of $153Million, including the net working capital associated with the assets and before any closing adjustments, and (ii) contingent payments of up to $83Million subject to average Brent prices and production performance between 2020-2023 as well as the realization of potential third party business opportunities. Upon closing, the base consideration will be adjusted by the collections received and payments made by the Company during the intervening period between the effective date, and the closing date.

The transaction, which is subject to a number of conditions precedent and to the Egyptian Ministry of Petroleum and Mineral Resources’ approval, is currently expected to complete early 2021. The proceeds will be used to reduce debt and for general corporate purposes. Consistent with this reported actions this year by most international oil and gas companies, the COVID-19 pandemic and associated negative economic effects, Dana Gas will take an impairment in Q3 2020 which will be disclosed to the market following review by the external auditors as part of the Q3 financial results.

 


Morocco, Considering COVID -19, Grants Licence Permit Extension

Moroccan authorities have extended the permit for the onshore Sidi Moktar acreage by 24 months, as a result of COVID-19 issues.

The beneficiary of the consideration is Sound Energy.

The company says the extension is a result of regular dialogue with the regulatory authorities, L’Office National des Hydrocarbures et des Mines ONHYM, which has now added 24 months to the initial period of the Petroleum Agreement in order for the Company to complete the committed work programme.

London listed Sound Energy was awarded the petroleum agreement related to the 4,712 square kilometre Sidi Moktar permit on 12 February 2018, with an initial period of 2 years and 6 months.  The Company holds an operated 75% position in the permits with the remaining 25% held by ONHYM.

The acreage is in the Essaouira basin, central Morocco

Subject to the issuance of the Joint Arreté signed by the Minister  in charge  of Energy and Minister in charge of Finance, the length of the initial period will now be 4 years and 6 months, commencing 9 April 2018. The work programme commitments for the initial period remain unchanged.  The lengths of the first and second complimentary periods, which would commence upon the successful completion of the recently extended initial period, remain unchanged at 3 years, and 2 years and 6 months, respectively.

 


Angola Signs Three New Deepwater Contracts with ExxonMobil

Angola’s National Oil, Gas and Biofuels Agency (ANPG) has signed three Risk Service Agreements with ExxonMobil and Sonangol Pesquisa e Produção, SA (Sonangol P&P), the operating arm of the state hydrocarbon company.

Deep water blocks 30, 44 and 45, covering over 17,800 square kilometers are located between 50 and 100 kilometers from the Angolan coast, in water depths ranging from 1,500 to more than 3,000 meters.

ExxonMobil will operate the three blocks, with 60% interest, while, Sonangol P&P “will have an associative participation of 40%”, a statement by ANPG declares.

Paulino Jerónimo ANPG ‘s Chairman of the Board of Directors, remarks that ExxonMobil’s presence in the Namibe Basin, where the country has never found hydrocarbon, is a key advantage. It would, he argues, help the country  to deepen the geological knowledge  in the largely unexplored basin.

“The success of the work carried out in Angola by international operators, many of whom already have a consolidated presence in the country, is an extremely important factor for the development and credibility of the Angolan oil sector”, Jerónimo notes.

“We will work with the Angolan government and ANPG to identify the border areas with the best resource potential, applying our proven experience and our cutting-edge technology,” says Andre Kostelnik, ExxonMobil’s General Manager in Angola, adding that ” these new concessions are the result of the long success history of our exploration and production activities in Angola.”

Sebastião Gaspar Martins, Chairman of the Board of Directors of Sonangol, in turn, considers the extension of prospecting and exploration activities to an area unexplored in Angola to be extremely important. “We are excited to be a part of this challenging project”, he explains.


Nigeria Opts for Non-Discretionary, Open Bid Round Awards in Proposed Reform Law

Nigeria has opted for non-discretionary award of petroleum licences, with open bid rounds as the core framework, if the Petroleum Industry Bill (PIB) currently in its parliament is the signpost of things to come.

The 252 -page draft bill was delivered to the bicameral house of legislature by the executive arm of the Nigerian government on Tuesday, September 29, 2020.

It says that petroleum prospecting licence or petroleum mining lease shall only be granted –

(a) based on a fair, transparent and competitive bidding process; and

(b) in compliance with the provisions of this Act, regulations made under this Act and licensing round guidelines issued by the Commission for each licensing round.

The ‘Commission” refers to the Upstream Regulatory Commission, which s created by the new law. The success of the reform rests largely on its capacity to deliver.

“The Commission may periodically publish a licensing round plan”, the PIB declares, stopping short of decreeing some form of regularity.

The Minister may, on the recommendation of the Commission, grant a petroleum prospecting licence or petroleum mining lease to a winning bidder, provided that the winning bidder has complied with the requirements of the bid invitation.

The Minister shall inform the Commission of his decision within 90 days of the application for licence or lease and where he fails to inform the Commission within the stipulated time, the licence or lease shall be deemed granted.

Award process

(1) The grant of a petroleum prospecting licence or a petroleum mining lease on a previously appraised area of a petroleum prospecting licence or a surrendered, relinquished or revoked petroleum mining lease in, under or upon the territory of Nigeria, shall be by an open, transparent, competitive and non-discriminatory bidding process conducted by the Commission. The winning bidder shall be determined on the basis of the following bid parameters –

(a) a single bid parameter, which shall be based on any one of the

following parameters –

(i) a signature bonus to be paid in full prior to the granting of the licence or lease by or on behalf of the winning bidder;

(ii) a royalty interest;

(iii) a profit split or profit oil split;

(iv) a work programme commitment during the initial exploration period; or

(v) any other parameter as may be defined specific to a bid round;

and

(b) a combination of the bid parameters, based on a points system assessable by the bidder in such

a manner that the bidder with the highest aggregate number of points shall be the winning bidder.

The PIB says that notwithstanding the bidding parameters prescribed, where there is a bilateral or multi-lateral agreement between Nigeria and another country, the Government may, for strategic purposes and in return for substantive benefits to the nation, direct the Commission to negotiate and award a petroleum prospecting licence or petroleum mining lease to a qualified investor identified in the agreement or treaty.

A SIGNATURE BONUS PAYABLE IN RESPECT OF any licence or lease awarded shall be based on a transparent method for evaluating the acreage.

The Commission shall call for bids in accordance with a procedure published on its website and in at least two international financial newspapers and two national newspapers with wide coverage.

Where the Commission calls for bids pursuant to this section, it shall prescribe a technical, legal, social, economic and financial requirement, including the minimum experience and capacity for an applicant in a regulation or guideline, and the applicant shall be chosen in accordance with the regulation or guideline.

The bids received based on the bid parameters through an open, transparent and competitive bidding process, shall include an electronic bidding process, open to public and conducted in the presence of representatives of the Nigerian Extractive Industry Transparency Initiative, the Ministry of Finance and the Ministry of Petroleum Resources.


Angolan 2020 Onshore Bid Round Now to Open in January 2021

Angola 2020 Onshore Bid Round will officially open in January 2021 and bids must be submitted by March 10th 2021.

Nine blocks are on offer, in the Lower Congo and Kwanza Basins.

The country’s International Competitive Bid Round for oil gas licenses, announced last year, is a scheduled offering for onshore and offshore, in the period 2019-2025.

Last year, Angola’s National Agency of Petroleum, Gas and Biofuels (ANPG), awarded three blocks: 27, 28, and 29, offshore in the deepwater Namibe Basin.

This year, the bidding plans have been disrupted by COVID-19 complications.

The blocks on offer are CON1, CON 5, CON 6, KON 5, KON 6, KON 8, KON 9, KON 17 & KON 20 (See map here), located in the Lower Congo Basin and the Terrestrial Kwanza Basin.

Data available includes 2D seismic coverage of the LowerCongo Basin, a recently updated Geological Map and Database of the Onshore Kwanza Basin and a compilation of recent aeromagnetic data covering the Transition Zone and Shallow Waters of the Lower Congo and Kwanza Basins.

 

 


Tullow’s Sale of Kenyan Asset Is Suspended

Tullow Oil has reported that the farm-down process in Kenya has been suspended “pending a comprehensive review of the development concept and strategic alternatives”.

The company and its partners, Africa Oil Corp. and TOTAL received a 15-month licence extension from the authorities on the 10BB and 13T licence blocks, which hosts the crude oil reservoirs that are the subject of development. Under the terms of the extension, partners have the right to extend the second exploration period for the blocks until 31 December 2020, with a further extension until 31 Dec 2021, contingent on an agreed work programme and budgets.

The partners are to use the extended time frame to work on “submitting an updated Field Development Plan by end of 2021”, Africa Oil says in a statement, a public admission that a Financial Investment Decision is unlikely to be taken any time before mid-2022

The Africa  Oil+Gas Report had earlier reported that the Kenyan Oilfield development would not reach FID before mid–2021. But that date, has now proven too optimistic.

The extant plan is that the Amosing, Ngamia and Twiga fields should be developed as the Foundation Stage of the South Lokichar development. This stage would include a 60,000 to 80,000BOPD Central Processing Facility (CPF) and an 892km export pipeline to Lamu.  The installed infrastructure from this initial phase can then be utilised for the optimisation of the remaining South Lokichar oil fields, allowing the incremental development of these fields to be completed at a lower unit cost post-First Oil.

Tullow Oil’s suspension of its planned farm down, however, doesn’t mean that the company has a future in Kenya. The farm down process will restart, after government has agreed on a new template for development, sometime in 2022.


Kosmos Farms Down in Namibia and South Africa

Kosmos Energy has agreed to sell its interests to Shell in Namibia, Sao Tome and South Africa

These African positions are part of a portfolio of frontier exploration assets that the Dallas based minnow agreed to sell to the AngloDutch major for approximately $100Million, plus future contingent payments of up to $100Million.

Kosmos’ asset in Suriname is the only non-African property on the list.

Under the terms of the agreement, Shell will acquire Kosmos’ participating interest in blocks offshore São Tomé & Príncipe, Suriname, Namibia, and South Africa , Kosmos says in a release. The consideration consists of an upfront cash payment of approximately $100Million, plus contingent payments of $50Million payable upon each commercial discovery from the first four exploration wells drilled across the Assets, capped at $100Million in aggregate. Three of the four wells are currently planned for 2021.

Kosmos plans to use up to one-third of the initial proceeds to test two high-quality infrastructure-led exploration prospects in the Gulf of Mexico, each offering hub scale potential with a low-cost, lower-carbon development scheme. The company expects to use the remainder of the proceeds to reduce borrowings outstanding under its credit facilities.

Post completion of the transaction, Kosmos retains a focused exploration portfolio with over six billion barrels of gross resource potential in the Gulf of Mexico and West Africa.  Kosmos also expects to realize approximately $125Million in total savings across capital expenditures and general and administrative expenses over the next two years as a result of the transaction.

 


Africa Oil Makes $137.5Million in Seven Months, on Asset It Purchased for $519Million

Africa Oil Corp. concluded its acquisition – worth $519.5Million – for a 50% ownership interest in Petrobras Oil and Gas BV (POGBV) in January 2020.

Today, seven and half months later, it reports it has received  total dividends amount of $137.5Million since the closing of the Prime acquisition on 14 January 2020.

POGBV’s primary assets are an indirect 8% interest in oil mining lease (OML) 127, operated by Chevron, containing the Agbami Field, and 16% interest in OML 130, operated by TOTAL and contains the Akpo and Egina Fields, offshore Nigeria.

The Toronto listed minnow says it has received four dividends from Prime Oil and Gas B.V. (Prime) since the January 2020 purchase. Prime is a company that holds interests in deepwater Nigeria production and development assets.

On August 31, Africa Oil Corp. reported that Prime has distributed the fourth dividend, “a  $50Million dividend with a net payment to Africa Oil of $25Million related to its 50% interest”.

The Company has applied  $17.7Million of this dividend to pay down the BTG term loan, reducing the outstanding balance to  $176.9Million.

Africa Oil Corp. is a Canadian oil and gas company with producing and development assets in deepwater Nigeria; development assets in Kenya; and an exploration/appraisal portfolio in Africa and Guyana. The Company is listed on the Toronto Stock Exchange and on Nasdaq Stockholm under the symbol “AOI”.

 

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