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Bid Round: Mozambique Drops AITEO From Contention

12 of the 13 companies which participated in Mozambique’s Sixth Licencing Round, launched in November 2021, were prequalified.

The only one who didn’t make it was the Nigerian owned AITEO Eastern Exploration and Production Company Limited, who was dropped for not meeting the pre-qualification requirements.

Sasol of South Africa, the only other Africa headquartered company in the bid round-apart from AITEO-made it to the next round.

The results will be announced before the end of January 2023.

The National Petroleum Institute (INP), Mozambique’s regulatory agency, says six of the pre-qualified companies are operators and the rest non-operators.

The operators include: China National Offshore Oil Corporation (CNOOC) Hong Kong Holding Limited, ENI Mozambico SPA, ExxonMobil Mozambique (Offshore) Limited, Petro-China International, Iraq FZE and TOTALEnergies Ep New Venture. Non-operating companies include RN Angoche PTE, Joint Stock Company Novatek, Qatar Petroleum Mozambique Limited, Sasol Africa (PTY) Limited, ONGC Videsh Limited and Discover Exploration Limited.

 

 


ENI Claims Azule Energy is Angola’s Largest Hydrocarbon Producer

Italian explorer ENI has announced the completion of the incorporated joint venture of bp and ENI.assets and operations in Angola.

Azule Energy, as it is called “is now Angola’s largest independent equity producer of oil and gas, holding 2Billion barrels equivalent of net resources and growing to about 250,000 barrels equivalent a day (boe/d) of equity oil and gas production over the next 5 years”.

The new company holds stakes in 16 licences (of which six are exploration blocks) and a participation in Angola LNG JV. Azule Energy will also take over ENI’s share in Solenova, a solar company jointly held with Sonangol, and the collaboration in the Luanda Refinery.

Azule Energy boasts a strong pipeline of new projects that are scheduled to come on stream over the next few years, growing organically from exploration discoveries. These include the Agogo Full Field and PAJ oil projects in Blocks 15/06 and 31 respectively, and the New Gas Consortium (NGC), the first non-associated gas project in the country, which will support the energy needs of Angola’s growing economy and strengthen its role as a global LNG exporter. The JV also holds significant exploration acreage in excess of 30,000 sqkm in Angola’s most prolific basins, allowing it to leverage proximity with existing infrastructures.

Azule Energy’s leadership team draws on experience and expertise from both parent companies. The leadership team will report to a six-person board comprising three bp and three Eni representatives, reflecting the ownership share of the company. All bp Angola and ENI Angola staff have joined Azule Energy.

The JV incorporation takes place after the pending conditions were met, among them having secured a third-party financing of $2.5Billion in the form of Pre-Export Financing, and after receiving regulatory approvals.

After announcing the intent to form the joint venture in May 2021, bp and ENI worked closely with the Angolan government, and Azule Energy’s formation was subject to all customary governmental and other approvals.

 

 


Panoro Finally Exits Nigeria

Three years after it first announced a deal to sell all its Nigerian assets, Panoro ASA has finally got it done. The Nowegian minnow has completed the sale of its fully owned subsidiaries Pan-Petroleum Services Holdings BV and Pan-Petroleum Nigeria Holding BV to PetroNor E&P ASA for an upfront consideration of $10Million plus a contingent consideration of up to $16.67Million based on future gas production volumes.

The Divested Subsidiaries hold 100% of the shares in Pan-Petroleum Aje Limited (“Pan Aje”), which participates in the exploration for and production of hydrocarbons in Nigeria and holds a 6.502% participating interest, with a 16.255% cost bearing interest, representing an economic interest of 12.1913% in Offshore Mining Lease no. 113 (OML 113). Following completion of the Transaction Panoro has no operational presence remaining in Nigeria.

“The upfront consideration of $10Million is expected to the paid within fifteen business days via the allotment and issue of 96,577,537 new PetroNor shares”, the company explains in a release. “The volume of PetroNor shares issued to Panoro has been determined with reference to the contractually determined 30-day volume weighted average price (VWAP) of PetroNor’s shares which are listed on the Oslo Børs with the Ticker “PNOR””.

Once the Consideration Shares are issued and received, Panoro will implement steps to distribute these new PetroNor shares to Panoro shareholders as a dividend in specie. Panoro will communicate separately in due course the timetable for this process and key dates.

Following receipt of the Consideration Shares, Panoro will temporarily hold a 6.78% shareholding with voting rights in PetroNor, until such Consideration Shares are distributed in specie to Panoro shareholders.

 


PetroNor Expects to Complete Aje Field Purchase in Two Weeks

The transaction has gone far beyond merely buying out Panoro’s interest

Norwegian minnow PetroNor E&P ASA has announced the seventh extension of the long stop date on its Aje field transaction.

This time the extension is shorter than a month: from 30 June 2022 to 15 July 2022. The company expects the Nigerian authorities to have sanctioned its purchase of interests in the Oil Mining Lease (OML) 113, which hosts the Aje gas and condensate accumulation in shallow water, off western Nigeria.

“Most CP’s (conditions precedent) have been satisfied or waived and the companies are initiating the final steps towards completion”, PetroNor says in a release. PetroNor expects conclusion of the outstanding matters and the subsequent closing with Panoro to commence within 14 days

The initial transaction announcement had  simply noted, in late 2019, it was PetroNor’s acquisition of Panoro Energy’s 6.5% interest in the asset, but  PetroNor had sought to have more stake in the overall asset and accompanying development project.

After several announcements of “extension of long stop dates”, PetroNor provided, in a May 2022 statement, a far deeper insight into the deal (which explains why the approval from the authorities had appeared to drag). The company said: “as an interim step towards completion of the transaction, PetroNor and the OML 113 Operator, Yinka Folawiyo Petroleum (YFP) have executed amendments to agreements for the formation of the jointly owned Aje Production, originally signed on 5 December 2019.

“The amendments provide for YFP’s contribution to Aje Production being limited to the shareholding in the YFP DW company. As a consequence, PetroNor’s ownership will be increased to 52% and Aje Production will hold a 15.5% participating interest and an economic interest in the order of 38.755 % in OML 113 during the majority of the project period. YFP has undertaken to align its voting rights with Aje Production’s objectives in the development of the Aje field”.

 

 


37 Entities Get Licences to Start Operating Marginal Fields in Nigeria

Nigeria has awarded Petroleum Prospecting Licences (PPLs) for 37 undeveloped discoveries (aka marginal fields) in the country’s prolific Niger Delta Basin.

At a glittering ceremony witnessed by over 300 guests in Abuja, the country’s political capital, 37 of the 57 oil and gas fields offered in a bid round launched two years ago were issued with the PPLs, having satisfied all conditions for award.

As of the date of the ceremony on June 28, 2022, 41 fields had been fully paid for, but four of those fields are having one challenge or the other in terms of partner relationships for the fields’ development.

Each of the 57 fields on offer was provisionally awarded to more than one company and each group of  “potential awardees” were meant to set up a Special Purpose Vehicle (SPV), some incorporated joint venture (IJV) that will then operate the fields.

The Nigerian Upstream Petroleum Regulatory Commission NUPRC, which is superintending the award exercise, has said that those who had not paid signature bonus as of February 2022 were deemed to have been disqualified.

As 41 fields have been duly paid for, there are 16 fields that are still open, in varying degrees, for awards.

Timipre Sylva, Nigeria’s Minister of State for Petroleum, gushed with pride as he spoke at the ceremony. “The implementation of the Petroleum Industry Act (PIA 2021) is in top gear”, he declared, referening the new petroleum regulation that governs the industry. “Consequently, the new awardees should note that their assets will be fully governed by the provisions of the PIA 2021”.

Mr. Sylva told the awardees to “ensure that good oilfield practice is employed, environmental considerations and community stakeholders’ management are not neglected”, as they develop their assets. “It is my strong belief that the awardees would take advantage of the current attractive oil prices to bring these fields into full production within a short period to increase production, grow reserves and reduce cost of production.

 

 


Tanzania to Ease Fiscal Conditions, Then Launch a Bid Round

Tanzania is looking to amend its nine-year-old Model Production Sharing Agreements (MPSAs) for its upstream hydrocarbon assets and then launch an acreage licencing sale.

The country’s Petroleum Upstream Regulatory Authority (PURA) is conducting reviews of the hydrocarbon code as well as the salability of the MPSAs, after which it hopes to launch a bid round of 23 acreages in the onshore and offshore terrains in the second quarter of 2023.

Tanzania introduced MPSA in 1989, as its own way of clarifying the terms and conditions it offers for investors interested in hydrocarbon acreages and how the government/ investor revenue share is caliberated in Production Sharing Agreements (PSAs). The 1989 MPSA was amended in 1995 and the 1995 MPSA was amended for 2004 and then 2008 and then 2013.

The 2013 MPSA has lasted the longest.

Tanzania holds close to 60Trillion cubic feet (Tcf) of gas, most of it in deepwater Rovuma Basin, located in the far reaches of the Indian Ocean. It has a modest gas-based industry which feeds off its 8Tcf of gas onshore and shallow water.

About 50Tcf or 83% of the gas reserves are a result of the discoveries in deepwater Rovuma basin between 2011 and 2014. Tanzania has launched two bid rounds since the MPSAs were promulgated in 2013 which have not attracted investor interest

The ongoing review of the MPSAs will update the fiscal regime in accordance with the global trends in trade, fuel prices over the past decade and estimates for the next decade, the institutional changes in Tanzania and current legal system, including the Petroleum Act of 2015, which is said to be unfavourable to investors.

The amendments will also address cost recovery; dispute resolution; local content; responsibility between the two parties in the contract and the exploration period.

 


Nigerian Marginal Fields Awardees to Receive Licenses June 28, 2022

By Joe-Jamola Mthembu, in Abuja

Nigeria will wrap up its most contentious hydrocarbon lease sale on June 28, 2022, when the regulator expects to issue Petroleum Prospecting Licences (PPL) to Special Purpose Vehicles (SPVs) formed by the winners of the marginal field bid round.

“We are focused on delivering the end result- issuance of PPL to awardees of the marginal fields before June ending”, says Gbenga Komolafe, Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission.  “It is going to be an impressive ceremony where awardees, National Assembly representatives, Officials from Oil Producing States, Delegates from Host Communities, Executives of the Nigerian Extractive Industry Transparency Initiative (NEITI), Representatives of the Oil Producers Trade Groups: OPTS and IPPG, aside members of the press will be present”, he explains. “Yes, we’ve progressed very fast and in deliberate manner as promised the nation”.

The NUPRC has hosted a joint review of the model license and model contract with the respective SPVs for alignment and concurrence and is currently incorporating the feedback into the model license and model contract to finalize the documents. Collation of the deed documents and preparation of the deed package are expected to have been finalized by 23rd and 24th June, 2022, thus enabling the contract signing and PPL issuing ceremony to happen on 28th June, 2022.

The licence award ceremony will cap a two-year, drawn-out process, fraught with significant challenges and ringing allegations of ‘bribe-for-field’ involving state officials. It was, until now, the least transparent hydrocarbon property sale in the country’s history. The bids were launched on June 1, 2020 by the (now defunct) Department of Petroleum Resources (DPR), with the bidding expected to close in September 2020, after which, six- months -at the most- the winners should have been announced, who, after payment of signature bonus, would have had their contracts finalised.

NUPRC meets the press: Part of the obstacles that the new regulator faced, it says, was that it had to conclude stakeholder consultations on draft regulations of the PIA, from which it would generate Model Licences and Leases, that would facilitate issuance of the licences to the Awardees who formed SPVs as required in the 2020 bid round guidelines.

There was not to be any licence awards. The provisions to grant licences to bid winners came with the passage of the Petroleum Industry Act (PIA), which itself came into being in August 2021, fourteen months after the launch of the bid round.

The NUPRC, which succeeds the DPR, came into being in September 2021.

Awardees have, however been clamouring for the license as far back as November 2021, as there can be no clear sight to development finance and field visit without a licence.

Marginal field rounds differ from other acreage lease sales because the fields are undeveloped discoveries located in acreages operated by some companies. To start work on a marginal field, an awardee has to engage with the party that operates the acreage from which the marginal field is carved out and ringfenced. Full due diligence can only be carried out with access to full field data, which cannot be accessed without a licence.

Even so, part of the obstacles that the NUPRC faced was that it had to conclude stakeholder consultations on draft regulations of the PIA, from which it would generate Model Licences and Leases, that would facilitate issuance of the licences to the Awardees who formed SPVs as required in the 2020 bid round guidelines.

At the most recent meeting with the winners, the NUPRC noted that it expected there is now a contract in place between the S.P.V member companies. The agency also noted that:

  • Non performing S.P.V member shares can be reassigned, due to lack of performance, cash call e.t.c. S.P.V member contracts should also include such clauses.
  • PPL is for three (3) years with an optional extension by the commission based on work done or on-going.
  • Performance Security (Amount and process) is still been reviewed, though it will be a one-off for the 3 year PPL term, covering the work program to first oil. Yearly work program will not require performance security only presentations to the commission.
  • Exploration rights belong to the commission, they would guide the work done and activities process, this is to endeavor that work is continually on-going on the asset.

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Angola’s Bid Strategy: Deliver 50 Blocks to E&P Companies in Five Years

By Toyin Akinosho, Publisher

Angola is banking on aggressive acreage lease sale to revamp its dwindling oil and gas production.

“The permanent supply of oil blocks is one of the actions that the Angolan Executive and the ANPG are counting on to stabilize the levels of oil production in the country”, according to the country’s National Agency for Oil, Gas and Biofuels (ANPG).

Angola’s production has been on a decline since it reached the magical Two Million Barrels of Oil Per Day (2MMBOPD) in 2008.

In March 2022, it produced 1.133MMBOPD and exported 1.094MMBOPD, according to ANPG figures published in the April 2022 edition of the Africa Oil+Gas Report.

Angola’s reserves have also trended south: dropping from 9.1Billion barrels at the end of 2010 to 7.8Billion barrels at the end of 2019, data published by BP Review of Statitics, the industry’s bible of reserves and output, indicate. In the same period, Algeria’s Nigeria’s and Libyan reserves have either grown or been flat, the same data affirm.

APPO Conference in Luanda

“We have the mandate to work towards the replacement of reserves with a view to mitigating the sharp decline in production”, declares Paulino Jerónimo, the ANPG’s Chief Executive Officer. “Thanks to the work that we have been carrying out within the scope of the 2021 – 2025 Bidding Strategy”, Jerónimo told the delegates at the just concluded 8th African Oil Congress and Exhibition held in Luanda, organised by the Organization of African Petroleum Producing Countries (APPO). “In this period, we estimate to deliver 50 concessions, and on the day I speak to you, 25 are awarded”, he underlined.

The ANPG Chief also reiterated the planned programme for a permanent offer of acreages to interested parties, in an open transparent fashion, outside the formal process of bid round. “After approval of the permanent offer regime, the ANPG is strengthened in terms of instruments to increase and boost oil concessions, through direct negotiation with national and international operators that are interested in working with us. This is a really important step so that we do not have prolonged stops in the granting of concessions and that exploration can be carried out so that production can then take place”.


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)

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