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Oando’s Expensive Route To 25,000BOPD

Oando-Headquarters-in-Lagos

The potentials and downsides of the biggest onshore Niger Delta asset sale in History

Oando’s ongoing purchase of the Nigerian assets of ConocoPhillips, the American independent, is a historical event. The price on the table is larger than the proceeds of any single bid round in the country in the last 10 years.

The invoice total comes to $1.79Billion, of which $1.6Billion will be paid by the Nigerian company for 20% stakes in four onshore assets, all of them operated by Agip and producing roughly 100,000 Barrels of Oil Per Day(BOPD) gross, which translates to 20,000BOPD net to Oando, on final purchase, around March 2013. The remaining $190Million is what Oando is paying for ConocoPhillips’ deep-water hydrocarbon properties. The $1.6Billion bill for onshore assets is the biggest price any one company has paid for an onshore asset or group of onshore assets in Nigeria.

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LUKOIL Extends Footprint In GOG

LUKOIL has acquired a 25% share in deepwater Block SL-4B-10 offshore Sierra Leone.

The Russian independent bought the stake from Talisman Energy, the Canadian minnow who is also the block operator. The remaining partners are Petronas (25%) and Prontinal (20%). SL-4B-10, covers an area of 2200 sq. km, in water depths ranging from 100 to 3000 m,  and it adjoins SL-05-11 Block, where LUKOIL is an operator. An exploration well is currently being drilled on the Djembe structure from Stena DrillMax rig.

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PetroSA in League With CoHydro

PetroSA, the South African state hydrocarbon company has signed a pact with its counterpart in the Democratic Republic of Congo (DRC) to cooperate and jointly pursue oil and gas opportunities in that country.

PetroSA and Cohydro have set up a cooperation committee, consisting of members from both NOCs to facilitate the implementation of the agreement.

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Rwe Dea Grabs More In The Gulf Of Suez

Egyptian authorities have awarded a 46km2 acreage to German independent RWE Dea.  The confirmation is subject to approval from the country’s parliament. The company will operate the East Ras Budran offshore concession with an 80% interest, in partnership with Dove Energy. The tract, offered under the Egyptian General Petroleum Corp’s International Bid Round 2011, is located in the Gulf Of Suez.


Why TOTAL’s Sale To Sinopec Is Surprising

There are five clear reasons why many were surprised by TOTAL’s announcement, on Monday November 18, 2012, that it sold its 20 percent stake in Nigeria’s Oil Mining Lease (OML) 138, to China Petrochemical Corp(Sinopec), as part of an asset-disposal programme.

  • How could the French major choose a $2.5Billion cheque over continued, profitable operation of a producing deepwater asset, gushing 140,000Barrels of Crude Oil a day, and primed to reach 180,000BOPD in a matter of months?
  • The OML 138 has considerable upside potential, at least at a first glance. To the east of Usan, the licence’s only producing field, is the undeveloped Ukot play, whose discovery well –Ukot-1-flowed at a rate of 13,900BOPD, on testing, in 1998. Usan’s appraisal had also led to the “discovery” of Usan West field which, with Ukot, is on standby, for near term development.

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Chinese Give Up Ugandan Prospect After Dry Hole

The Kanywataba prospect area in Exploration Area 3A (Southern Lake Albert), has reverted to the Government of Uganda, following the expiry of the six months Exploration licence which was issued Tullow Oil in February 2012. The licence, which was issued in recognition of the time lost during the tax dispute over the sale of Heritage’s interests in Uganda to Tullow, was to enable the drilling of an exploration well on the Kanywataba Prospect.

Following the farm-down by Tullow Oil to the French major TOTAL and China’s state owned giant CNOOC in February 2012, CNOOC was appointed operator of the area and subsequently drilled the Kanywataba-1 well in May 2012 to a total depth of 2105metres.

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Atlantic Energy To Grab A Stake In Shoreline Energy Resources

Atlantic Energy is in the process of raising a billion dollar ($1Billion) loan from Nigerian banks, in large part to fund its planned acquisition of a significant percentage of Shoreline Power’s equity in Shoreline Energy Resources.

Shoreline Energy Resources is the special purpose vehicle(SPV) with which Shoreline Power, a Nigerian energy and infrastructure company, and Heritage Oil Plc, the London listed independent, are about to acquire the 45% equity held by Shell, ENI and TOTAL in the Oil Mining Lease (OML) 30, onshore Niger Delta. NPDC, the operating arm of the state hydrocarbon company NNPC, will operate the acreage with 55%.

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Lekoil Is The Preferred Bidder For ConocoPhilips’ Nigerian Assets..

 

Lekan Akinyanmi, CEO, Lekoil

“We have a preferred bidder”, Conoco Phillips wrote in a message to Oando, Seplat and Transcorp/MidWestern on the night of Wednesday, October 31, 2012. But the company didn’t name the winner to the three losers, leaving all of them guessing. Lekoil, the least known of the four last runners, won the bid hands down with its $2.5Billion offer.  There are feelers that one of its several institutional backers is willing to put down a hefty share of the sum, even as the negotiation process is being finalised. But we had goofed. We announced, in last week’s edition of this newsletter, that Oando, with $1.3Billion bid, was leading the race. We were wrong but the fact is that our assumptions mirrored those of some of the most impeccable sources in the industry. “You know, we easily forget about Lekoil”, noted one respected industry watcher.

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Libya Won’t Auction Oil Blocks Until 2014

The new government in Libya is not in a rush to have a bid round of hydrocarbon acreages in the next year and half. This much can be gleaned from statements made at the Libya Oil and Gas Summit which ran in Tripoli from September 24 and 26, 2012.

An impending review of the blocks in terms of potential risks, the type of contracts, as well as the pre-qualification of bidders will keep the government’s hands full.

Libya had total proven oil reserves of 47.1 billion barrels as of December 2011, according to BP Statistical review of world energy. The country is the largest tank in Africa, and one of the ten largest globally. Some 80 percent of Libya’s proven oil reserves are located in the eastern Sirte basin, which accounts for most of the country’s oil output. Libyan oil is generally light (high API gravity) and sweet (low sulfur content).

The transitional government which took power after the Civil war had declared intention to review all the extant contracts. The new, elected government is saying the same thing. The review, they have both sought to make clear, is not with the aim of taking away acreages from any company. It’s expected to make the new rulers themselves get a grip on the environment in which they are playing.

Under Ghadaffi, there was so much opacity in contracts.

The pre-war, 1.65MMBOPD Libyan production was achieved by nine producing companies, joint ventures and consortia including the state owned Arabian Gulf Oil Company (AGOCO),  which is the country’s largest producer, with 350,000BOPD, Sirte Oil Company (another state hydrocarbon company),  Waha Oil Company (comprising the major state company NOC and ConocoPhillips, Marathon and Hess), Akakus Oil operations(NOC, Repsol and others), Melitah Oil&Gas(ENI and NOC), Mabruk(TOTAL and NOC), Wintershall, Haroungue (Suncor and NOC), Zueitina consortium(NOC, Occidental and OMV).

The new government comes across as friendlier to Western companies, and may adopt a new contractual model that is less onerous than the current provisions. But a lot is still uncertain in the new Libya.


Lukoil Converts Independence Acreage To PSC

Lukoil

Russian operator LUKOIL has signed a production sharing agreement with the government of Cote d’Ivoire, covering the 450 km2 offshore block CI-524 in the Gulf of Guinea.

The agreement converts an exploration effort into a production programme: Block CI-524 represents an eastern part of block CI-401 which LUKOIL Overseas has been involved in exploring since 2006. Lukoil (which has since taken over operatorship from Vanco), holds a 60% interest, PanAtlantic (former Vanco) has 30% and state hydrocarbon company PETROCI has 10%.

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