All articles in the Farm in, Farm Out Section:


FAR May Not Yet Ride into the Sunset, Afterall

Australian junior FAR Limited has cautioned that the proposed acquisition of all of its shares by Remus Horizons PCC has a dim chance of happening.

“The Remus Proposal terms are uncertain at this stage”, the company declares in a statement early on Friday, January 8, 2021.

The most significant lie in the release goes thus: “The Remus Proposal is conditional on the Woodside Sale not occurring”. Meaning: If FAR’s shareholders agree to sell the company’s 15% stake in Senegal’s Sangomar oilfield development to Woodside, then Remus will not move ahead.

“FAR cautions that the Remus Proposal is not a legally binding offer, there is no certainty that the Remus Proposal will necessarily eventuate, and the Remus Proposal terms are uncertain at this stage”, FAR explains.

“Accordingly, care needs to be used in assessing the Remus Proposal at this time. The Remus Proposal is conditional on the Woodside Sale not occurring”.

FAR says it has obtained further information from Remus in relation to the Remus Proposal as follows:

  • Remus is presently finalising the funding arrangements in advance of making the proposed offer.
  • The only internal and regulatory approval required to proceed with the offer is the final approval of the Remus Board and final review and confirmation of documentation.
  • Remus is presently satisfied that it will not need to undertake any further due diligence on FAR.
  • FIRB approval is not required and any offer made will not be conditional on FIRB approval.
  • Any proposed offer is expected to be subject to a requirement that Remus achieves a controlling interest in FAR together with other customary conditions.

“In these circumstances, FAR has determined to further postpone the shareholder meeting to consider approving the Woodside Sale currently scheduled for 21 January 2021 to 10.00 am on 18 February 2021. This will enable further time for FAR shareholders to see if the Remus Proposal eventuates, if so assess its merits, and consider the Woodside Sale on the basis of more detailed information. FAR will in due course distribute updated meeting information in this regard. FAR is not presently inclined to further postpone the shareholder meeting to consider updates in relation to the Remus Proposal. In the meantime, FAR is continuing to advance negotiations with Woodside in relation to the form of the Woodside Sale proposed contractual documentation following Woodside’s pre-emptive rights exercise. FAR advises that it is in the process of paying the RSSD project November 2020 cash call ($8.96Million plus interest) and the December 2020 cash call

 


TOTAL Annexes a New Acreage in East Mediterranean

French supermajor TOTAL says that an international consortium it is leading has signed an exploration and production agreement with the Egyptian Natural Gas Holding company (EGAS) for the North Ras Kanayis Offshore block located in the Herodotus Basin, offshore Egypt in the Mediterranean Sea.

TOTAL will operate the block with 35% equity. AngloDutch giant Shell holds 30%, with Kuwait Foreign Petroleum Exploration Company (KUFPEC) having 25%. Tharwa Petroleum, an Egyptian state hydrocarbon firm, holds the remaining 10%.

North Ras Kanayis is an exploration acreage covering 4,550 square kilometres, extending from 5 to 150 kilometres from the shore, with water depths ranging from 50 to 3,200 metres. The Herodotus Basin is an underexplored area and the agreement includes a three dimensional (3D) seismic campaign during the first three years.

‘‘TOTAL is pleased to further strengthen its Eastern Mediterranean position as an operator of this exploration and production agreement’’, commented Kevin McLachlan, the French major’s Senior Vice President Exploration. “We are excited by the exploration potential of the North Ras Kanayis Offshore block. It reinforces our presence in Egypt, following a gas discovery made in July 2020 with the Bashrush well on the North El Hammad license, to be developed through a tie-in to nearby existing infrastructure.”

TOTAL holds a working interest of 25% in the North El Hammad license, alongside operator ENI (37.5%) and BP (37.5%)


Nigeria’s Opaque Marginal Field Bid Round Process Escalates the Risk of ‘Investment Scare’

By the Editorial Board of Africa Oil+Gas Report

The Department of Petroleum Resources (DPR), Nigeria’s hydrocarbon regulatory agency, started emailing letters to potential awardees of the country’s Marginal Fields Bid Round over the last week of 2020.

But the fact that the agency does not publish a list of these potential awardees, and does not send the letters all at once, but chooses to distribute the letters in batches, sometimes in the wee hours of the morning, has raised concerns about the transparency of the process. It also heightens the risk of assurance of investment inflows.

The three and half month-long bid round exercise was launched on June 1, 2020 and concluded on September 15, 2020. The bid analysis, carried out by the DPR, was concluded a month after and the result dispatched to President Muhammadu Buhari for approval.

Since the President’s nod, the follow up process has been so opaque that speculations have replaced public conversations that open bid rounds supposedly engender. Nobody said that this was a discretionary award, so why should the standard discussion of the bid process begin with: “Have you received your letter?”. If the list was published no one would be making such a stress induced query. And no one would be suggesting that there are “checkpoints” at the Ministry of Petroleum Resources, where agents are demanding bribes to deliver letters, or add companies to the approved list. Openness is important.

The DPR’s tepid public statement, released on December 31, 2020, sheds only very little light. “161 successful companies have been shortlisted to advance to the next and final stage of the bid round process for 57 marginal oilfields in the country”, it says. What the statement does for us at Africa Oil+Gas Report, is that it confirms the numbers-of those shortlisted- in our story of December 16, 2020. But it gives us no comfort to note that the Ministry of Petroleum Resources appears uncomfortable to publish the approved list of shortlisted companies for a bid round that has received the President’s nod for close to a month.

For all the strident conversations around probity in public office, for all the talk about Nigeria’s poor reputation as an investment destination; for all the challenges that the country has with revenue generation, for all the problem about a soaring debt burden, this highly patronized marginal field bid round was an opportunity to show that the country was open for business.  600 applications for a bid round is a high figure by any standard anywhere in the world. But it is not one to be taken for granted. People flock to Nigerian marginal fields- where at least a well has proven hydrocarbon resources in place, and most fields are sited in the producing parts of the basin- than they do to acreage licencing rounds, in which the tracts are located largely on the margins of the Niger Delta and many of the available assets are exploratory.

Even as the competition is open only to locals, the investment dollars are largely coming from abroad-as development of 57 fields in a two-to-four-year span cannot be funded by Nigerian lenders alone. This means that, with this process, Nigeria has attracted the gaze of the global investment community. It is about hydrocarbon resources, aftercall.

It is so unfortunate, then, that the current leadership at the Ministry of Petroleum Resources has chosen to throw away the chance to show that competitive bids for Nigerian hydrocarbon resources can again be open and transparent, after years of struggling with reputational damage.

Whatever happens after now, with this process, the waters have already been muddied.

This editorial is a public service-oriented opinion of the Africa Oil+Gas Report


Angola Charges $1Million Entry Fee for Next Bid Round, to Launch in April 2021

Angola’s National Oil, Gas and Biofuels Agency (ANPG), as a national concessionaire, has announced its intention to hold an international tender for the award of new oil concessions in the country.

Nine blocks are on offer: three in the Terrestrial Basin of the Lower Congo and six in the Terrestrial Basin of the Kwanza. The contest opens 120 days from December 31, 2020, ANPG says. That is April 30, 2021.

This licence sale, which focuses on Blocks CON1, CON5 and CON6, of the Terrestrial Basin of the Lower Congo, and Blocks KON5, KON6, KON8, KON9, KON17 and KON20, of the Terrestrial Basin of Kwanza, “has a mandatory condition of participation the payment of an Entry Fee (Entry Free) in the amount of $1,000,000.00 (One Million United States Dollars), which will allow access to the Data Packages related to the basins to bid.

The deadline for the submission of proposals runs until June 9, 2021, in compliance with the 40 days provided for by law, and the opening ceremony for proposals will take place on June 10, 2021.

“This 2020 bid aims to relaunch the exploration and production of hydrocarbons in the terrestrial areas of the referred basins, to decrease the decline in production, by increasing the exploration and discovery of new resources, to stimulate the local creation of small and medium oil companies, to promote the incorporation of qualified Angolan labor, as well as fostering technological innovation and good governance practices. 

Paulino Jerónimo, Chairman of the Board of Directors of ANPG

The bid round is taking place under Law no. 10/04, of 12 November (Law of Petroleum Activities, amended by Law no. 5/19, of 18 April) and the aforementioned Presidential Decree No. 86/18, “to acquire the status of associate of the national concessionaire and to contract goods and services in the oil sector ”, Mr. Jerónimo explains.

“The National Concessionaire will communicate in due time the date and location of the technical presentations (roadshows), through an advertisement on the ANPG portal ( www.anpg.co.ao ), and in the national and international media”.

 


Serica Walks Out of Namibia

British junior, Serica Energy has decided to walk away from its Licence 047 in Namibia, covering Blocks 2512A, 2513A, 2513B and part of 2612A.

It is exiting the South West African country, nine years after it was originally awarded the assets.

Serica, a gas focused company with relatively extensive UK operations, has basically sat down on its Namibian portfolio for all of those nine years.

It admitted this much in its statement: ”The initial work commitment was fulfilled when BP farmed-in to the licence and funded a 3D seismic survey at no cost to Serica. In late 2013, BP decided to exit the licence rather than making a commitment to drill in the next licence period”.

Serica claims it “continued with its technical work to interpret the seismic and geological data, and secured extensions to the licence and waivers on area relinquishment and well commitments”.

Having just been formally awarded four new blocks in the UK’s 32nd licensing round and seeing gas prices trending up, it has opted “to withdraw from Namibia to focus on Serica’s North Sea-focused portfolio and opportunities”.

“The pace of exploration activity in Namibia has been slower than we hoped, and the development of any discovery would likely have been expensive, time consuming and inconsistent with our sustainability objectives”.


FAR Is About to Ride into the Sunset

FAR Limited, the Australian minnow which brands itself as a key player in Africa’s Northwest margin, may soon be swallowed.

If the company’s shareholders agree to a proposal from Remus Horizons PCC Limited, a private investment fund regulated by the Guernsey Financial Services Commission, FAR, an explorer with holdings in Senegal, Gambia and Guinea Bissau; the MSGBC axis where hub sized hydrocarbon resources have been found in the last eight years, will be gone.

Things are still in a preliminary stage. FAR cautions that “the Proposal is not a legally binding offer, there is no certainty that the Proposal will necessarily eventuate, and that the Proposal terms are uncertain at this stage. Accordingly, care needs to be used in assessing the Proposal”.

Remus’ move is “conditional non-binding indicative, to engage in further discussions and further investigations for the purpose of evaluating its capacity to make an offer or announce an intention to make an offer to acquire 100% of the shares of FAR at 2.1c cash per share.

Remus has stated that the price represents a premium to the cash backing per share that would exist if FAR was to complete the sale of the Rufisque Offshore, Sangomar Offshore, Sangomar Deep Offshore (RSSD)project to Woodside Energy (which pre-empted the earlier proposed sale to ONGC Videsh.

Remus has also stated that it is conditional (amongst other things) on: –

The FAR shareholder meeting to consider approving the sale of the RSSD project scheduled for Monday 21 December 2020 being rescheduled. –

  • FAR providing access to management and information in relation to the RSSD project and Remus being satisfied with such information.
  • No superior proposal emerging. Remus has stated that the Proposal will be funded from available internal cash reserves and that any formal binding offer would not include any financing conditions. Remus has stated that Remus is willing to discuss the possibility of making available a zero coupon bridge loan to FAR of up to $50Million from the date of any binding offer on terms and subject to conditions to be agreed to enable FAR to meet its valid funding calls in relation to its interest in the RSSD project and other necessary working capital requirements.
  • Remus has stated that it is well placed to move quickly to complete its confirmatory investigations and has committed to engage collaboratively with FAR to progress the Proposal.

FAR says it is seeking clarification from Remus regarding various aspects associated with the Proposal. In these circumstances, FAR has determined to postpone the shareholder meeting currently scheduled for 21 December 2020 to 10.00 am on 21 January 2021. “This will enable further time for FAR and its shareholders to be able to obtain further information in relation to the Proposal and assess the relative merits of the sale alternative and the Proposal. FAR will in due course distribute updated meeting information in this regard. FAR has appointed Baker McKenzie to advise in relation to the Proposal”.


Rent Seeking New Age Hopes for a Well Heeled Partner in South Africa

New Age Energy (New Age), is hoping that the successful results of TOTAL’s South African drilling will lure  E&P companies to farm in into its Algoa-Gamtoos Licence.

The company is embarking on the second exploration phase of the licence, which will run for two years from 17 November 2020.

The work programme during this period will include a further 300 km2 of 3D seismic data acquisition in the licence area.  

But New Age is unlikely to invest in 3D seismic data acquisition, let alone drill a well on the licence. It’s not about having access to funds and resources. New Age Ltd is not wired to invest heavily in exploration technology. It focuses on looking for the assets and the farmos.

TOTAL operated Block 11B/12B,“ is located adjacent to the Algoa-Gamtoos license”, says Tower Resources, a minority partner to New Age Ltd on the acreage. “The Algoa-Gamtoos license also contains the southern deep-water basin margin of the Outeniqua Basin that was targeted by TOTAL’s Brulpadda and Luiperd-1X wells and is approximately 150 kms along strike to the East”.

The Luiperd-1X well encountered 73 metres of good quality net pay in 85 meters of gross sands in the main target interval andthe well reached a maximum constrained flow-rate through a 58/64″ choke of 33 million cubic feet per day of natural gas (‘MMcfpd’) and 4,320 barrels of condensate per day (‘bcpd’), an aggregate of approximately 9,820 barrels of oil equivalent per day (‘boepd’), according to reports. The choke configuration could not be increased due to surface equipment limitations.

New Age has reprocessed the existing 2D seismic data over the license during 2020. But that is all it would do. The company says that the effort has yielded a considerable improvement in resolution, and expects to have updated analysis and volumetrics available in January 2021, which will also be made available to potential farm-in partners.

 


Three Tiers of Winners Emerge in Nigeria’s Marginal Field Bid Round

By Macson Obojemiemoin, in Port Harcourt

Three tiers of winners are likely to emerge in the result of Nigeria’s marginal field bid round, according to indications at the Ministry of Petroleum Resources, in Abuja, the country’s capital.

The first tier refers to a list of two companies awarded the same field. The second tier is a list of three companies awarded the same field and the third tier refers to a list of companies numbering as many as 10, awarded the same field.

Not a single company is awarded a field, all by itself, Africa Oil+Gas Report checks indicate.

161 companies, in total, are on the three tiers.

Out of the 57 fields offered in the bid round, four fields are left unawarded, Africa Oil+Gas Report has learned, but we couldn’t confirm if those four fields include Abigborodo and Hely Creek, which were on offer at the time of bidding, but have since been ordered by a Federal High Court to be removed.

The matching of several companies to a field would suggest that payment of signature bonus, which is a determining factor in winning a field, will be shared.

A company might find itself the sole holder of a marginal field license in the event that the other company/ies matched to the field is/are unable to come up with its/their share of the signature bonus.

The three and half month-long bid round exercise was concluded on September 15, 2020 and the bid analysis, by the Department of Petroleum Resources (DPR), was concluded a month after and sent to President Muhammadu Buhari for approval.

But the process of approval of the award list has gone on for over two months, “because several of the companies who bid, paid all the fees and made it through all the milestones, had put so much pressure to be accommodated”, impeccable sources tell Africa Oil+Gas Report. “In the event, government was trying to please everybody and that is why you end up with 161 winners”.

When contacted, the DPR did not officially comment about these details. The agency did not also say when the result will be announced. Instead, its Head of Public Affairs, Paul Osu, simply said: “Successful candidates will be notified when the process is concluded”,

As have become evidently clear in the last 12 months, Ministry sources tell Africa Oil+Gas Report, the authorities will be very strict with signature bonus payment, as they have been with royalty, lease rentals, and other tariffs recently. “Once you cannot pay your share of the signature bonus within a time limit, you are out”,

 

 


San Leon Pushes Its Oza Field Farmin into 2021

The AIM listed minnow; San Leon Energy, says that its planned investment in the 400 Barrel Per Day Oza Field onshore Niger Delta will not be realized until 2021.

The company says that the parties it is negotiating with “have agreed to extend the completion date to early in the new year”.

“As previously announced, worldwide restrictions put in place in response to the Covid-19 pandemic have slowed the logistical process in concluding the conditions precedent in the Subscription Agreement”, San Leon says in a note.

“Nevertheless progress continues to be made and the trading subsidiary of a major oil company, which along with a local Nigerian bank, is to provide a five year term debt to (licence holder) Millenium Oil and Gas Company Limited, Decklar’s local partner, has provided a further written confirmation of its support of the transaction”, San Leon explains.

“Given the proximity of the Christmas holiday period, the parties have decided to review the status of the outstanding conditions in the new year and assess at that time what remains outstanding”.

 


LEKOIL in Talks with Optimum over Obligations

LEKOIL has confirmed that it is currently in talks with Optimum Petroleum Development Company, the Operator of the Oil Prospecting Lease (OPL) 310, over its share of sunk costs and consent fees which fell due on November 30.

Optimum had conveyed its plan to enforce a default clause to Lekoil in a letter as payments to cover the portion of sunk costs and consent fees, have not been received as at when due.

In addition to the fees, Optimum highlighted that Mayfair Assets and Trusts Limited, a fully owned subsidiary of Lekoil has also not made payments to cover general and administrative costs for the year as agreed within the Cost and Revenue Sharing Agreement (CRSA) signed by both companies.

Lekoil continues to discuss with Optimum on deferment of these payments as the company intends to focus its financial and other resources in support of securing funding for the second phase of the Otakikpo development as well as the Ogo appraisal programme.

Working with Optimum, Lekoil says it has identified and engaged an appropriate rig for the appraisal drilling where the service provider has accepted the result of the early performed site survey.

“It is well known that over the years”, Lekoil explains in a release, “Lekoil has resolved similar issues due to the good working relationship between the parties. Lekoil has been able to receive multiple extensions on outstanding payments and remains hopeful of a mutually acceptable solution being reached shortly.

“To finance the appraisal programme, Lekoil has explored and is in constructive discussions with potential financiers to provide a combination of cost effective vendor and alternative financing solutions. A further update will be provided to shareholders when appropriate”.

Optimum Development Limited is an indigenous, Nigerian owned E&P company. With major participating interest in OPL 310 Optimum is the operator and local partner while Lekoil technical and financial partner.

 

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