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Africa Oil Divests from Kenyan Oil Development, to Focus on Namibia and Nigeria

By Toyin Akinosho

Africa Oil Corp, which marketed Kenya’s opportunities to the world and brought in Tullow Oil, has elected to withdraw from the country’s only upstream development project.

The Canadian junior says it has submitted withdrawal notices to its joint venture partners on Blocks 10BB, 13T and 10BA in Kenya, to unconditionally and irrevocably, withdraw from the entirety of the joint operating agreements (JOAs) and Production Sharing Contracts (PSCs) for these concessions. The Company has concurrently submitted notices to Ministry of Energy and Petroleum, requesting the government’s consent to transfer all of its rights and obligations under the PSCs to its remaining joint venture partner.

Africa Oil Corp has determined that “the carrying value of the Kenya intangible exploration assets was written down to $58.6Million at December 31, 2022, and the Company intends to further impair this value to zero”.

“Our strategy has shifted to focus on production and high potential exploration opportunities”, declares Keith Hill, the company’s President and CEO. Those opportunities include “our Orange Basin portfolio where we are now appraising the exciting Venus discovery, offshore Namibia”.

The production opportunity refers to the company’s stake in Prime Energy, which receives dividends from proceeds in Agbami, Akpo and Egina fields in Nigeria.

Africa Oil Corp. came into the consciousness of the global oil and gas community in the late 2000s, when it was vigorously marketing the Kenyan and Ethiopian opportunities, distributing printed regional maps and seismic sections from tiny booths at conferences focused on African oil and gas. These were the years immediately after the commercial discovery of oil in Uganda.

One company which took more than a cursory glance at those maps was Tullow Oil, which went ahead to farm in to acreages held by Africa Oil, took charge as operator and proceeded on a seismic and drilling campaign. In March 2012, Tullow announced a commercial discovery at Ngamia -1, in Block 10BB, placing Kenya on the hydrocarbon map of the planet. The South Lokichar basin development grew on the back of the Ngamia-1 discovery and the string of finds that came after it.

The latest field development plan calls for seven fields to contribute to a 130,000Barrels of Oil Per Day central processing facility from which the crude is evacuated into a 20 inch, 823 kilometre long, heated pipeline, which ferries the commodity to the country’s port town of Mombassa on the edge of the Indian Ocean.

AOC says, in its release, that it is proud to have played a central role in discovering the oil fields in Kenya’s South Lokichar Basin.

“We continue to believe these discoveries will form the basis of a significant oil producing province in the coming years with strategic value for the country. We have also had the privilege of working with our host communities on our social-focused programs and we are grateful to them for welcoming us to their midst. We thank the government of Kenya, our host communities and our joint venture partners for their support over the years and we wish them the best in taking the project forward to the next stage.”


Uganda’s Turaco Block Awarded to a Second Firm in Seven Years

Ugandan authorities have signed a production-sharing agreement (PSA) with a subsidiary of Australian firm DGR Global for exploration of oil in the west of the country.

DGR Energy Turaco Uganda Limited will explore in the 637 sq km Turaco block) in the Albertine Rift basin that straddles the African nation’s border with the Democratic Republic of Congo.

Armour Energy Uganda Ltd, another subsidiary of DGR Global, got a two-year extension of its licence for the Kanywataba exploration area, which it has been exploring since 2017.

Turaco was one of five blocks put up for auction in Uganda’s second licensing round, launched in 2019.

“This licence marks a significant milestone for the competitive second licensing round,” declared  Ruth Nankabirwa, the country’s Energy Minister.

It would be the second time in seven years that the Turaco block would be awarded to an operator.

In a 2015 bid round, the Nigerian independent Waltersmith Petroman Oil Limited, was awarded the same Block, located in Ntoroko District. A year later,  the company had opted out because of terms that included (1)the state’s request that it posted a bond amounting to $58Million for its four year work programme, (2), carry the state 20% and (3) share the profit 50: 50 with the state.

DGR won the block in an updated bid round, started four years ago and delayed by the COVID-19 pandemic as travel curbs affected the bidding and negotiation stages, the Minister explained.

With this transaction, DGR has four years of exploration.

Uganda hosts 6.5Billion barrels of crude oil, 20%  (or 1.2Billion barrels), of which  is estimated recoverable reserves.

Development plan for Turaco or any other block for that matter is dependent on the delivery of the ongoing development of the Tilenga cluster of fields by TOTALEnergies and the Kingfisher field by CNOOC, as well as the installation of the EACOP pipeline for the evacuation. First oil from these projects is expected by late 2026.





Savannah Sells Stake in Chad-Cameroon Pipeline

Savannah Energy Plc has sold a quarter of its 41% stake in Cameroon Oil Transportation Company S.A. (COTCo).

The British junior reports that its wholly owned subsidiary, Savannah Midstream Investment Limited (SMIL), has signed a Share Purchase Agreement (SPA) with the national oil company of Cameroon, Société Nationale Des Hydrocarbures (SNH), relating to the sale by SMIL and purchase by SNH of 10% of the issued share capital in Cameroon Oil Transportation Company S.A. (COTCo).

COTCo owns and operates the 903km Cameroon section of the Chad-Cameroon export pipeline, the Kome Kribi 1 floating storage and offloading facility and related infrastructure. The pipeline has a 250,000Barrels Per Day (BPD) nameplate capacity and is the only international export route for oil production in Chad. “During 2022, COTCo transported an average of 124,000BPD of crude oil valued at an estimated $4.6bBillon at the prevailing Brent crude oil prices”, Savannah declares in a press statement.

“In consideration for the sale of the Shares, SNH will pay a cash consideration of $44.9Million to SMIL”. Savnnah says in a release. The Consideration, when received, will be used by the Savannah group for part repayment of existing debt facilities.

“Completion of the transfer of the Shares from SMIL to SNH will result in SMIL shareholding in COTCo reducing from 41.06% to 31.06%. Completion shall occur upon satisfaction of certain conditions precedent related to amendments to the bylaws of COTCo and is expected to occur in H2 2023. SMIL will retain the right to the dividend attaching to the Shares until the date of payment of the Consideration.

“Pursuant to the terms of the SPA, SNH and SMIL have pledged, inter alia, their support of one another as shareholders in COTCo.”

Panoro Completes Entries into Two Eq. Guinea Acreages

The Norwegian producer Panoro Energy ASA has confirmed that the award of Block EG-01, has been ratified by the Government of Equatorial Guinea.

The Oslo based minnow also notes that all necessary approvals have been received allowing for the completion of Panoro’s farm-in to the Kosmos Energy operated Block S offshore Equatorial Guinea.

So, the company has concluded regulatory approvals into two blocks in the space of six months: the farm -in into Block S was announced in October 2022 while the award of Block EG-01 was offered in February 2023

Panoro now officially holds a 56% operated interest in Block EG-01 alongside partners Kosmos Energy (24%) and GEPetrol (20%). It also has a 6% participating interest 12% non-operated participating interest in Block S, which was derived from purchasing 6% stake from each of Kosmos Energy and Trident Energy, such that the remaining stakes in Block S are Kosmos Energy (34%, operator), Trident Energy (34%) and GEPetrol (20%).

Exploration: Panoro repeats, in a statement, that one exploration well is planned on Block S during 2024 to test an Albian play in the Akeng Deep prospect. Gross mean unrisked prospective resources are estimated to be around 180 million barrels and the prospect lies within tie-back distance to the Sendje-Ceiba FPSO.

Block EG-01

Block EG-01 is located in water depths ranging from 30 metres to 500 metres, mainly shallow, and is covered by high quality 3D seismic. The government’s award of Block EG-01 is for an initial period of three years during which the partners are expected toconduct subsurface studies based on existing seismic data to further define and evaluate the prospectivity of the block. Following this, the partners will have the option to enter into a further two-year period, during which they will undertake to drill one exploration well.

Past exploration activities have led to the identification of an extensive prospect inventory within tie-back distance to the Ceiba Field and Okume Complex facilities. Since 2003, three exploration wells have been drilled on the block, with two encountering thin oil and gas pay and one encountering oil shows. The main hydrocarbon plays are Eocene sands and Upper Cretaceous turbidites analogous to the Block G plays where over one billion barrels STOIIP has been discovered. Moreover, there is potential for deeper Albian targets, similar to the Block S prospect, which is scheduled for drilling in 2024.

Block S

Block S covers a surface area of 1,245 km2 with water depths ranging from 450 metres to 1,500 metres and is covered by high quality 3D seismic. The block surrounds the producing Ceiba Field and is adjacent to the producing Okume Complex, which is operated by Trident Energy and where Panoro holds a 14.25% non operated participating interest. Past exploration activities on Block S have tested and proven the necessary geological play elements which has led to an extensive prospect inventory being identified within tie-back distance to the Ceiba Field and Okume Complex facilities.

Panoro Annexes More Slice of Tunisia

Norwegian junior Panoro Energy has entered into a definitive agreement with Beender Tunisia Petroleum Limited to acquire the latter’s 40% shareholding in Sfax Petroleum Corporation (SPC) for a total consideration of approximately $18.2Million in a mix of cash and shares.

The total acquisition cost of $6 per 2P barrel.

The deal translates to an addition of almost 3Million barrels of oil of 2P reserves and net daily production of 800-900Barrels of Oil Per Day (BOPD). This increases Panoro’s full year 2023 production guidance to 9,500 to 11,500BOPD (from 9,000 to 11,000 BOPD), recognising approximately nine months of production from completion, and increases the 2023 peak target to in excess of 13,000BOPD (previously in excess of 12,500BOPD) around year end SPC, through its subsidiaries, indirectly owns a 49% interest in the producing TPS Assets which comprise five oil field concessions in the region of the city of Sfax, onshore and shallow water offshore Tunisia, including Cercina, Cercina Sud, Rhemoura, El Ain/Gremda and El Hajeb/Guebiba. SPC also holds 87.5% interest in the Sfax Offshore Exploration Permit (SOEP) offshore Tunisia.

Prior to the acquisition, Panoro’s effective ownership of SPC stood at 60% (29.4% interest in the TPS Assets and 52.5% interest in SOEP), which it acquired from OMV in 2018. Post the Acquisition Panoro’s ownership of SPC will increase to 100% (49% interest in the TPS Assets and 87.5% interest in SOEP) and SPC will be a fully owned subsidiary of Panoro.

Panoro says that the taking of Beender’s 40% ownership of SPC equates to a 19.6% interest in the producing TPS Assets and 35% interest in SOEP.

As part of the acquisition, Panoro has assumed approximately $ 4Million of Beender’s share of outstanding Tunisian loan facilities. Panoro has refinanced this Tunisian facility into its principle corporate facility, increasing total facility amounts by $9Million (separately Panoro has made Q1 loan repayments of $ 6Million). Panoro has then also assumed Beender’s share of cash and working capital equivalent to approximately $6.5Million.

The Consideration payable is inclusive of all working capital adjustments with completion expected in April 2023.

Balance sheet as of the completion date will include an additional 40% of asset and liabilities of SPC acquired at fair value and equally the results from the Tunisian operation will be consolidated at 100% Upfront consideration comprises $4.9Million cash and $ 8.3Million (“Share Consideration”) via the allotment and issue of 2,945,035 new Panoro shares at an issue price of NOK 29.18 per share (issue value NOK 85,936,092.12).  Half of the Share Consideration have an agreed lock-up period of six months form the issue date, whereas the remaining 50% are subject to a lock-up of 12 months.

Deferred consideration of  $ 5Million payable in cash by end 2023.

About The TPS Assets.

AFC Buys Up Aker Energy, Will Determine the Course of Ghana’s Next Deepwater Development

Africa Equity Investment has acquired Aker Energy, operator of Ghana’s Deepwater Tano Cape Three Points (DWT/CTP) block.

The transaction hands the company a 50% stake in the ready-to-develop asset, which contains the ultradeepwater Pecan field, located in >2,500metres of water, with 2P reserves volume estimated at around 450–550Million barrels of oil equivalent.

Aker Energy’s management team will remain in place after the consummation of the deal and will keep working on the project, including the submission of the plan of development (PoD) for the Pecan field to Ghanaian authorities by the end of April 2023.

AEI is a subsidiary of Africa Finance Corporation (AFC), who is always looking for a high value, energy infrastructure deal on the continent. AFC originally invested in Aker Energy in 2019, after the latter  issued subordinated convertible bonds to the   multilateral finance development institution, of $100Million. “The bonds have a coupon of 5.5% per year and will be converted to equity in the event of an Initial Public Offering (“IPO”) of Aker Energy, at an agreed discount to an IPO offering price of 1.85% per year”, Aker Energy said in a statement at the time. The bonds have a maturity of five years, with an option to extend with another three years. The proceeds from the bonds were be part of the financing for the development of the Deepwater Tano. The investment has since increased to $200Million and AFC president and CEO Samaila Zubairu had been sitting on the Aker Energy board.

The Pecan complex was discovered in 2012 by Hess Corporation who sold to Aker Energy in 2018. Aker had meant to fast track the project but had run into headwinds in the last 30 months.

Aker has indicated that the field could produce as much as 110,000Barrels of oil per day. What it hasn’t said, in public, is how long the peak production could last.  The project could cost up to $4Billion.

ENI is Open to a Farm Down in Cote d’voire

Italian explorer ENI is making progress as the sole developer of the massive Baleine discovery it made in Block CI-802 offshore Cote d’voire in 2021.

But the company is open to having a partner with good money to farm in and share the costs.

ENI has an 83% stake in Block CI-802, with state-hydrocarbon company Petroci, being carried with 10% equity.

The Italian giant has not openly declared the need for farminee, but the ultimate cost of the deepwater development at over $10Billion naturally calls for a well-heeled, get-along partner, even when the development is a multi-phased activity for which the funding is provided in bits.

ENI is fast tracking the development with first oil targeted for the second quarter of 2023. The first phase envisages a fast-track subsea tieback to the Firenze FPSO, which will produce from three subsea wells in 1200 metres of water, with oil exported by shuttle tanker and gas piped to thermal power stations in the Ivory Coast..

A full-field development will involve many more subsea wells probably tied back to a bigger production facility, perhaps a bigger FPSO or a shallow water fixed platform.

An appraisal cum exploration drilling was successfully delivered in August 2022, boosting reserves, according to the company, by 25% to 2.5Billion barrels of oil and 3.3Trillion cubic feet of gas. It is not clear if these are ultimately recoverable reserves or contingent resources.

A partner choosing to take a 40% equity in the project will be funding up to $5Billion of the project. Analysts put the cost per barrel at a low $4.2 and NPV10 at a $1.2Billion. The 40% farminee will be entitled to at least 300Million barrels of oil and 400Billion cubic feet of gas.

SAPETRO Loses Angola’s Block 32 to Somoil

By Macson Obojemuinmoin

The Nigerian independent, SAPETRO, lost the bid for the purchase of some equity in deepwater Block 32, off Angola, at the last minute.

The prize went instead to Somoil, Angola’s largest homegrown E&P company.

Galp Energia, a Portuguese independent, announced it had agreed to sell its 9% of Block 14. 4.5% of Block 14K and 5% of Block 32 (to Somoil for $830Million, net of taxes on estimated capital gains, including c.$655Million to be received until the conclusion of the operation and c.$175Million of contingent payments in 2024 and 2025, dependent on the price of Brent.

SAPETRO, a company owned by the retired Nigerian army general Theophilus Danjuma, was in keen contest to purchase Galp’s 5% of Block 32.

And that was part of the problem.

Galp was on a mission to sell all its assets in the southwest African country-at once- and Somoil was willing to discuss.

Then again, Somoil is a favoured buyer of Angolan upstream assets. It has consistently been a preferred bidder in the several asset sales conducted in its home country in the last three years.

One of the three largest Nigerian owned producers of hydrocarbons, SAPETRO has always wanted to diversify its portfolio and become more of a Pan African company. But it hasn’t been lucky. It threw money at Afren in 2014, just about when the company was heading to bankruptcy. It attempted to revamp the Seme field off Benin Republic and left after it had pumped millions of dollars down the hole. SAPETRO also took position in the Mozambique channel off Madagascar and left without a drop of oil to show for its effort.

Algeria Finally Approves ENI ‘s Annexation of BP’s Assets

Italian major ENI has achieved the closing of its acquisition of BP business in Algeria, the company says in a release.

The transaction, the company explains, “has been approved by the competent national and antitrust authorities”.

The assets are the British explorer’s equity in the two gas-producing concessions “In Amenas” and “In Salah”, which are jointly operated with Sonatrach and Equinor.

The In Amenas Gas Project, commenced production in 2006, and by November 2021, had recovered 84.42% of its total recoverable reserves, with peak production in 2009, which was approximately 21.27 thousand Barrels Per Day (BPD) of crude oil and condensate, 870Million standard cubic feet per day (87 MMscf/d) of natural gas and 28,000BPD of natural gas liquids. The field, as of November 2021, was now expected to recover 159Million Barrels of Oil Equivalent (159MMBOE), comprised of 36.61MMbbls of crude oil & condensate, 466.32Bscf of natural gas reserves and 44MMbbls of natural gas liquid reserves.

The In Salah Complex conventional gas field, which commenced output in 2003,  recovered 49.15% of its total recoverable reserves, with peak production expected in 2023, according to market data published by Offshore technology website as of December 2021. The peak production will approximately 880MMscf/d of natural gas. Based on economic assumptions, production will continue until the field reaches its economic limit in 2062. The field currently accounts for approximately 4% of the country’s daily output.

Afentra Wins Small, But the Sonangol Prize Is Still Out of Grasp

Afentra has reported that it has not yet concluded its acquisition of some of Sonangol’s asset in Angola, but it has won Government’s approval to acquire minor interests from a company named INA-Industrija d.d (INA).

The London headquartered independent has now, in the bag, 4% interest in Block 3/05 and 4% interest in Block 3/05A offshore Angola, pursuant to a sale and purchase agreement between INA and Afentra’s wholly-owned subsidiary, Afentra (Angola) Ltd, dated 19 July 2022.

While these properties are good to have, the chase for Sonangol’s equity in Block 3/05 (20%) and Block 23 (40%), is the big deal in Afentra’s sights. A 20% entry into Block 3/05 will give Afentra some 4,000Barrels of Oil Per Day on a net basis, going by the Block’s current output. The sale and purchase agreement for this transaction is subject to a number of conditions precedent, including the receipt of governmental approvals and the extension of the Block 3/05 Production Sharing Agreement until at least December 31, 2040. Afentra says it “remains in discussion with all relevant parties in this regard, as the Block 3/05 contractor group continues to progress conversations with the ANPG, the country’s oil and gas regulatory body”.

Afentra discloses that it has agreed with Sonangol to extend the long-stop date from 31 December 2022 to 31 March 2023. “The receipt of approval from the Ministry of Mineral Resources, Oil and Gas for the INA Acquisition is a key step in this process and we now look forward to completing the acquisition in the coming weeks. It will mark our entry into Angola and the first of two highly complementary acquisitions that will provide Afentra with a strong growth platform, underpinned by robust cash flow and significant potential to deliver upside value. It will also mark the inception of our partnership with Sonangol in Blocks 3/05 and 3/05A where we intend to work closely with Sonangol to optimise production and to extend the life of this quality, long-life asset.”

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