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Sirius & Somoil Sign SPA For Three Angolan Offshore Blocks 

The Sirius-Somoil consortium, comprising London based Sirius Petroleum and Somoil S.A., Angola’s largest homegrown, privately owned E&P firm, have signed a legally binding Sale and Purchase Agreement (SPA) with Sonangol Pesquisa e ProduçãoS.A., Angola’s state-owned oil company, to acquire participating interests of 8.28% and 10% respectively in the producing Angolan offshore Blocks 18 and 31 and a 25% participating interest in the exploration Block 27, for a total consideration of $335.5Million.

If it goes through, it would be a huge, transformational deal for both companies, especially Sirius which has, until now, been trying to stamp its signature on some asset or the other in the African hydrocarbon market.

The proposed acquisition is expected to be entirely financed by debt.

Proposed Acquisition Summary

• Acquiring non-operating interests in prolific deepwater production assets with strong cash flow characteristics.

• Current gross production from Blocks 18+31 is averaging c.160,000BOPD.

• Net production entitlement to the Consortium is expected to average 15,500BOPD.

• Significant cash flow entitlement is given low operating costs and unrecovered costs

• Major medium and long-term development upside.

• Sirius-Somoil will be making targeted investments in Sonangol social projects in Angola as part of its committed strategy of working with partners to improve lives through sustainability initiatives in the community.

Block 31 – Producing

• Acquiring a 10.0% interest for a total consideration of $170Million.

• Unrecovered development cost balance of c.$14Billionn boosts contractor group entitlements, enhancing overall EBITDA/bbl and long-term returns.

• The Block is operated by BP Angola and is located offshore some 400 kilometres northwest of Luanda. 
 
• The block consists of four oil fields; Plutão, Saturno, Vénus, and Marte (PSVM), which were discovered between 2002 and 2004 in water depths of up to 2,000 metres in the North-East part of Block 31.PSVMis the second BP-operated development in Angola and production started up in December 2012. License partners are currently BP (26.67%), Equinor (13.3%), Sinopec International (15%), and Sonangol (45%).

• Current gross production from the block is averaging c.80,000BOPD.

• Gross 2P/2C reserves of 275MMbbls relate to existing production and sanctioned developments, according to the operator.

• Further gross 2C resources of 516 MMbbls from existing discoveries, according to Gaffney Cline & Associates.

• Future payments, on new developments within the block, are contingent on sustained high oil prices (>=$75/bbl) and first oil from long-term developments.

  Block 18 – Producing

• Acquiring an 8.28% interest for a total consideration of $165Million.

• The block is operated by BP Angola and is located offshore, 160 kilometers northwest of Luanda. Eight discoveries have been made in this block, of which the fields Galio, Cromio, Cobalto, Paladio, and Plutonio make up the first producing complex known as Greater Plutonio.

• Production started in 2007 and remains at material levels. Late last year the Platina project started production adding significant volumes and reserves to total block production. License partners are currently BP (26.67%), Equinor (13.3%), Sinopec International (15%), and Sonangol (45%).

• Current gross production from the block is averaging c.80,000BOPD.

• Gross 2P/2C reserves of 220MMbbls relate to existing production and sanctioned developments, according to the operator.

• Future payments, on new developments within the block, are contingent on sustained high oil prices (>=$75/bbl) and first oil from long-term developments.

 Block 27 – Exploration

• The Consortium is acquiring a 25.0% non-operated interest in this deepwater exploration and appraisal block for a total consideration of $0.5Million.

• The block is located offshore in the Kwanza basin, an area known for its gas potential.

The Proposed Acquisition is conditional upon satisfactory due diligence (“DD”) being conducted and following the signing of the SPA the Consortium will enter a period of DD of the data for blocks 18, 31, and 27 supplied to the Consortium by Sonangol.  The economic effective date of the Transaction is April 2022. Completion is expected to take place in 2022, subject to customary conditions and approvals.

The Consortium expects that the Proposed Acquisition will be financed through the provision of new debt facilities.


Mergers and Acquisitions Activity on the rise in Africa

By Paul Sinclair

Several such transactions have occurred since 2020

The events of the past two years have accelerated mergers & acquisitions trends in Africa, and 2022 is already witnessing increased deals activity. The continent has now positioned itself as a driver of oil & gas deals, with several transformational transactions already announced over the past six months. In fact, the proposed acquisition of Mobil Producing Nigeria by Seplat Energy in February remains, so far, the biggest acquisition in the industry globally this year.

However, and while deal-making is on the rise, acquisition strategies and targets vary from one region to another.

Oil prices rebound drives consolidation around producing assets

Higher oil prices since 2021 have further unlocked the African M&A market, especially for well-established operators and asset owners. However, companies remain highly cautious in their spending given continued market uncertainty and a focus on shareholder returns.

This is translating into consolidation around key producing assets for companies seeking to maximise the value earned from blocks or fields they are already familiar with. Examples include VAALCO Energy’s acquisition of Sasol Gabon’s participation in Etame Marin, or Kosmos Energy, Tullow Oil and PetroSA’s acquisition of Occidental Petroleum’s interests in the Jubilee and TEN fields offshore Ghana. All these assets are producing and witnessing fresh drilling campaigns that will boost output this year, making them ideal targets given current market conditions.

A focus on brownfield assets in West and Central Africa

In the mature petroleum provinces of West and Central Africa, deals are focused on brownfield opportunities. These include both producing fields with strong upside potential, or appraisal and near-producing assets where barrels can be produced and exported in a short timeframe with capex.

Several such transactions have occurred since 2020, including small and mid-sized acquisitions by Perenco in Gabon and the DRC, by Panoro Energy in Gabon and Equatorial Guinea, or by Decklar Resources and San Leon Energy in Nigeria.

Brownfield assets are also the ones attracting the biggest M&As by far. At the end of last year, Savannah Energy announced its acquisition of the entire upstream and midstream asset portfolio of ExxonMobil and PETRONAS in both Chad and Cameroon. The deals were valued at some $626m, making them amongst the biggest in the region.

Earlier this year, Seplat Energy also announced its proposed cash acquisition of Mobil Producing Nigeria for $1.283Billion (plus up to $300Million contingent consideration), in what remains so far the biggest deal of the year globally.

Both Savannah Energy and Seplat Energy’s acquisitions are in fact so significant that they constitute Reverse Takeover transactions pursuant to the UK listing rules.

Within the region, Nigeria will continue to drive M&A activity, first because of continued divestments by IOCs but also because of the size of its proven reserves. Shell’s divestment from its entire JV portfolio in the country will be a natural driver, with a 30% interest in 19 oil mining leases (OMLs) onshore and in shallow water up for grab. But beyond IOCs’ assets, Nigeria holds Africa’s most attractive brownfield opportunities with well-established reserves waiting to be developed by investors, providing they are willing to take on the above-the-ground risks.

A Focus on play opening assets in Southern Africa

While risk appetite for new assets in West and Central Africa is relatively low, it is considerably higher in frontier basins in Southern Africa. This is particularly the case in Angola (Namibe and Kwanza Basins), Namibia (Kavango, Walvis Bay, and Orange Basins), and South Africa (Orange Basin), but also in Zimbabwe (Cabora Bassa Basin).

While Angola is one of the oldest-producing markets on the continent, substantive reforms since 2017 have successfully brought back investors into the country’s producing and exploration blocks.

In fact, Angola is one of the very few oil producing markets that is supporting M&A activity in exploration assets. Such deals are notably driven by Sonangol’s partial divestment process, which has already attracted the interests of Afentra in Block 23 (Kwanza Basin) and of the consortium of Angolan independent Somoil and British independent Sirius Petroleum in Block 27 (Namibe Basin).

Further south, Namibia and South Africa have become exploration hotspots and are both driving significant M&A activity now. This is especially the case within the Orange Basin, where both Shell and TotalEnergies have announced world-class discoveries this year.

In January, Eco (Atlantic) Oil & Gas acquired Azinam in a bid to enter Blocks 3B/4B and Block 2B within the Orange Basin offshore South Africa, and to consolidate its interests in its four existing licenses within the Walvis Basin offshore Namibia.

The rise of the independents

2022 will only entrench the rise of established and new independents across the continent as they continue to top the list of buyers.

In Nigeria, established independents who are familiar with the country’s business and risk environment already seek to grow their portfolio and take on some of the IOCs’ assets. While access to capital will be a challenge for many of them, the market has already seen two deals worth over $1bn each in 2021 and 2022. But Nigeria is not just a billion-dollar deals market and holds significant potential for smaller and less risky ventures relying on risk service agreements such as FTSAs or RFTSAs around near-producing assets with existing discovery wells and established infrastructure.

In Central Africa, Perenco has demonstrated a business model that many seek to follow as they take on the region’s mature fields and redevelop them more efficiently. Equatorial Guinea, Cameroon, Gabon, and Congo host a growing series of independents that could increasingly make a difference as these markets seek to encourage exploration around producing hubs and boost output.

Finally, Southern Africa is steadily imposing itself on the table of many buyers as the region offers the right mix of producing assets, exploration blocks in frontier basins, and a supportive business environment. These factors are providing fertile grounds for a new generation of local and international independents set to shape the region’s energy landscape this decade.

Paul Sinclair is the Vice President of Energy & Director of Government Relations – Green Energy Africa Summit and Africa Oil Week (www.Africa-OilWeek.com)


Sonangol Would Have to Be Restructured Before Sale

State hydrocarbon firm Sonangol has not yet created the right conditions required for some of its equity to be sold in the ongoing privatization of Angola’s national assets.

One of such conditions include restructuring not only the company, but the (oil) sector in which Sonangol is involved “and as we know this restructuring is only just beginning”, according to Patrício Vilar,  chairman of the Board of Directors of the Institute for Management of State Assets and Holdings (IGAPE)

But he said that the state has kept Sonangol in its privatisation process in 2022.

Sonangol -owned assets make up about a quarter of the entire Privatisation bucket list.

The list includes divestments in the subsidiaries and assets of Sonangol Cabo Verde – Sociedade e Investimentos and Óleos de São Tomé and Príncipe, as well as stakes in Founton (Gibraltar), Sonatide Marine (Cayman Islands), Solo Properties Knightbridge (United Kingdom), Societé Ivoiriense de Raffinage (Cote d’Ivoire), Puma Energy Holdings (Singapore) and Sonandiets Services (Panama), by 2021.

Sonangol will sell also its stake in WTA-Houston Express and French company WTA, as well as assets in Portuguese real estate companies Puaça, Diraniproject III and Diraniproject V, in Sonacergy – Serviços e Construções, Sonafurt International Shipping and Atlantis Viagens e Turismo.

Sonangol also holds assets to be privatised in Angolan companies in the Health, Education, Transport, Telecommunications, Energy, Civil Construction, Mineral Resources and Oil and Banking sectors.

 

 


ENI and Sonatrach Agree to Pump 318Bcf/Year of Algerian Gas Through Transmed

Algeria’s state hydrocarbon company Sonatrach has signed an agreement with ENI, the Italian explorer which allows the latter to increase the volume of gas imported through the TransMed / Enrico Mattei pipeline “under the umbrella of the long term gas supply contract in place with Sonatrach starting from the next autumn”.

The deal was inked by the President of Sonatrach, Toufik Hakkar, and the CEO of ENI, Claudio Descalzi, in the presence of the Algerian President Abdelmadjid Tebboune and the Italian Prime Minister Mario Draghi.

This agreement will allow to exploit the pipeline’s available transportation capacities to ensure greater supply flexibility, gradually providing increasing volumes of gas from 2022, up to 9Billion cubic meters (Or 318Bllion cubic feet) per year in 2023-24.

“The signing took place during the visit of the Italian Prime Minister Mario Draghi to the President of the Democratic Republic of Algeria, Abdelmajid Tebboune, which also included a wider letter of intent to strengthen cooperation in the energy field signed by the Algerian Foreign Minister Ramtane Lamamra and the Italian Foreign Minister Luigi Di Maio on behalf of their respective Governments, in the presence of the Algerian Prime Minister, Aymen Benabderrahmane, the Algerian Minister of Energy Mohamed Arkab, and the Italian Minister for Energy Transition Roberto Cingolani”, a statement by ENI read.

“The agreement between ENI and Sonatrach, whose foundations have been laid during the previous visit of Descalzi and the Italian Foreign Minister Di Maio to Algiers last February 28, was defined and signed in record time following intense negotiations between the top management of the two companies”, ENI reported. “The new gas volumes covered by the agreement are also the result of the close collaboration in the development of upstream gas projects, leveraging Eni’s distinctive fast track model, which is bringing a significant acceleration to the production potential of the Algerian fields”.

 

 


Sirius, Petrolog, Afentra Move Closer to Purchase of Sonangol’s Producing Interests

Angolan state oil firm Sonangol, has selected 10 companies for purposes of farm down negotiations from six blocks in which it has interests.

Four of the blocks are producing; two are undeveloped.

Sonangol says that during a public tender it conducted between September 20, 2021 to January 27 of the current year, “due diligence process was carried out to verify the compliance of competitors, which resulted in the certification of a total of 10 companies, among which, under the terms of the said tender, were selected because they presented the best proposal as per information below: ´

  1. Blocks in Production:
  • Block 3/05 – Afentra (20%)
  • Block 15/06 – Namcor, Sequa and Petrolog (10%)
  • Block 18 – Somoil and Sirius (8,5%)
  • Block 31 – Somoil and Sirius (10%)
  1. Blocks in Exploration:
  • Block 23 – Namcor, Sequa and Petrolog (Operator 40%); and Afentra (40%)
  • Block 27 – Namcor, Sequa and Petrolog (35%); and Somoil and Sirius (25%)

“The partial farm down of participating interests, of the above-mentioned concessions, is part of Sonangol’s strategy of repositioning and sustainability of its investment portfolio”, the company says in a statement.


NUPRC Chief Frowns at “Trading Papers”

Gbenga Komolafe, Chief Executive of Nigerian Upstream Petroleum Regulatory Commission, has expressed displeasure at the predilection for assignment of rights to upstream assets by Nigerian licence holders.

“In many cases, the moment people get a letter of award, they write to say they want to assign”, he told Africa Oil+Gas Report in an interview.

“Assign what?”, he asked.  “There’s a phrase in law, frequently rendered in Latin: Nemo dat quod non habet meaning ‘You can’t give what you don’t have’. For you to get an award you have to show the proof that you can pay the signature bonus and you can finance the field development. You get it only because you’ve met the requirements. Your award would have been consummated before you can talk of assignment. We shouldn’t be encouraging people making money by trading papers”.

Komolafe, a career public servant, who was appointed to the job in September 2021, declared to AOGR that “what separates a fish seller from a proper industry person is the attitude to the development of the field or asset he is assigned”.

In the very brief interview, the first exclusive conversation he would have with any media enterprise, Komolafe declared again and again:

“We will not be arbitrary. Anyone whose licence is revoked during my tenure will not have a space to challenge. We will take a decision such that anyone challenging will be standing on very weak ground. You bring your field development programme. That programme is very key and our oversight of the programme will be guided by the finest points of the law”.

The Full interview can be accessed in these pages culled from the February 2022 edition of Africa Oil+Gas Report.

 

 


UNOC Partners with Chinese Explorer to Bid for Ugandan Block

By Joe Mshoeshoe, in Nairobi

It wasn’t clear, from UNOC’s press release, if any of the blocks in the ongoing licencing round, had been renamed Pelican-Crane block, the object of the UNOC-CNOOC joint application agreement, or whether the proposed application will be outside the process of the ongoing licencing round.

 The Uganda National Oil Company (UNOC) and the Ugandan branch of China National Offshore Oil Corporation (CNOOC) have signed a joint application agreement (JAA) for the Pelican-Crane block, located in Albertine Graben.

“An opportunity to jointly apply for a licence emerged in 2018, and subsequently an MoU was signed by the parties in Beijing”, Proscovia Nabbanja, UNOC’s CEO, says in a release. “The Pelican-Crane block has high potential and is one of the biggest exploration blocks in the Albertine Graben,” UNOC added.

In late 2020, UNOC had applied for one of the four blocks offered in the Second Licensing in line with its “ambitions of eventually attaining the required capacity to become an operator,” Ms. Nabbanja said at the time. The company was one of the four shortlisted applicants, which also included PetroAfrik Energy Resources East Africa Limited, a local company, Total E &P, Activites Petroliniers (France) and DGR Global Limited from Australia.

The shortlisted applicants were to participate in the request for proposal, a biding stage expected to end in June 2021 before licensing in December 2021. Licensing is preceded by negotiation of production sharing agreements.

The blocks on offer were: Block01 (Avivi); Block02 (Omuka); Block03 (Kasuruban); Block04 (Turaco);

Block05 (Ngaji).

It wasn’t clear, from UNOC’s press release, if any of the blocks in the ongoing licencing round, had been renamed Pelican-Crane block, the object of the UNOC-CNOOC joint application agreement, or whether the proposed application will be outside the process of the ongoing licencing round.

UNOC simply says that “the JAA will be submitted to Uganda’s Ministry of Energy and Mineral Development in a process that UNOC expects to culminate in an exploration licence for the block”.


Angola Wraps Up 40 Day ‘Limited’ Bid Round on April 5

The Angolan government expects that the 13 selected companies it has invited to bid for any of eight acreages should submit their proposals by 6pm on April 1, 2022.

By then it would have been 35 days since the Angola National Agency for Oil, Gas and Biofuels (ANPG) launched the “limited tender”, as it calls it, by sending invitation letters to 13 selected companies to look at Blocks (16/21, 31/21, 32/21, 33/21 and 34/21 ) Blocks in the Baixo Congo Basins and (7/21, 8/21 and 9/21), in the Kwanza Basin.

“The Limited Public Tender modality occurs when, for reasons of national strategic interest, the awarding of Concessions that have already been abandoned and returned to the State sphere is proposed, being limited to a limited number of companies with proven experience and accumulated knowledge in the exploitation of hydrocarbons in basins and geological systems”, ANPG says in a public notice.

“The Restricted Public Act for the Opening of Proposals will take place on the April 5th, 2022”, the statement adds.

“The range of invited investors includes countries such as Angola, Australia, Norway, Italy, Qatar, France, England, Namibia and China”.

 

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Ghana Pre-emption Bumps Up Tullow’s & PetroSA’s Interests

By pre empting the sale of Occidental’s interests in the Jubilee and TEN fields in Ghana to Kosmos Energy, the old partners in the fields have bumped up their equities, with Tullow Oil becoming the major beneficiary.

This transaction takes Tullow’s equity interests to 38.9% in the Jubilee field and to 54.8% in the TEN fields and adds c.5,000BOPD of unhedged daily production”, Tullow explains.

“Following completion of the pre-emption by both Tullow and PetroSA, Kosmos’ ultimate interest in Jubilee will be reduced by 3.8% to 38.3% (Kosmos retains ~80% of the original acquired interest), and Kosmos’ ultimate interest in TEN will be reduced by 8.3% to 19.8% (Kosmos retains ~25% of the original acquired interest)”, the company says in an update.

Whereas Tullow Oil has finalized the process and followed through to payment, PetroSA, the South African state hydrocarbon firm, is still working its way through the books and its conclusion “remains subject to execution of definitive agreements and required government approvals”.

Consideration paid to Kosmos from Tullow after taking into account closing adjustments was approximately $118Million in the first quarter. An additional ~$10 million is expected to be payable on completion of the PetroSA pre-emption process. Kosmos plans to accelerate debt reduction with the proceeds.

Tullow says that the additional equity increases its 2022 capital expenditure forecast by $30Million to $380Million “and is expected to generate c.$300Million incremental free cash flow at $75/bbl between 2022 and 2026”.

 


Afentra Continues Negotiations to Purchase Sonangol’s Stakes

Afentra plc has confirmed that negotiations with Angolan state hydrocarbon firm Sonangol E.P to purchase interests in Block 3/05 and Block 23 in the country’s deepwater, have continued into the second month of 2022.

Afentra submitted a non-binding expression of interest for the two blocks on 20 September 2021, following Sonangol’s announcement of an asset sales process to divest some of its interests in eight blocks across its portfolio.

On  October 7, 2021, Sonangol announced Afentra as one of six bidders on Block 03/05 and one of two on Block 23.

Since submitting the Expression of Interest, Afentra has been engaged in negotiations with Sonangol to reach agreement on the detailed terms of the transaction. These negotiations are ongoing but there is, however, no guarantee at this stage that an agreement between the two companies will be reached. The Acquisition would be subject to satisfactory completion of the necessary due diligence and agreement of a sale and purchase agreement with Sonangol.

If Afentra ultimately proceeds with the Acquisition, it would be classified as a reverse takeover transaction in accordance with Rule 14 of the AIM Rules for Companies. Trading in Afentra shares will remain suspended until either the publication of an AIM admission document, or until confirmation is given that Afentra’s participation in the bid process has ceased.

“Whilst the timeline of the Sonangol sales process has been extended beyond the previously expected timetable, this has not diverted Afentra from the pursuit of other production assets in West Africa. The Company continues to appraise multiple acquisition opportunities that support its growth strategy in terms of acquiring assets across West Africa with solid low-cost production, proven reserves and significant upside”, Afentra says in a release.

Says Paul McDade, Chief Executive Officer, Afentra plc: “We are pleased that we were selected by Sonangol to negotiate for Block 3/05 and Block 23 in Angola, and have been working diligently to find a mutually attractive outcome for both parties. Given our ambition to build an African business of scale, we also remain focused on identifying additional value-accretive opportunities across West Africa and are engaged in a number of active acquisition processes.

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