All articles in the Farm in, Farm Out Section:

GUINEA

Dana Farms In To Guinean Block UK based Dana Petroleum and US Independent Hyperdynamics Corp. have signed an exclusive letter of intent (LOT) for Dana to gain an interest in the Texas company’s 80,000 sq km concession offshore the Republic of Guinea.

The LOI positions Dana to potentially acquire a 23% working interest in the large concession which encompasses all of offshore Guinea, an area equivalent to 330 UK blocks.

The LOI contemplates Dana and Hyperdynamics signing definitive binding documents no later than December 31, 2009. During this period, Hyperdynamics is legally committed to deal exclusively with Dana with respect to this 23% interest.

Hyperdynamics intends to bring in to the concession a further significant partner with strong financial and technical capability. Dana has the option to negotiate for an additional interest of up to a further 27% (to give Dana a total of 50% interest) if Hyperdynamics does not sign a letter of intent with another potential partner by November 30, 2009.

Hyperdynamics first officially announced its intent to farm-out a portion of its Guinea acreage in January 2007. Since that time the company has opened up its Houston data room and made presentations in numerous venues including Calgary and Houston, and retained the services of advisors such Zeus Development Corp. to assist in attracting potential farm-in partners.

Hyperdynamics has recently signed a new MoU with the government of Guinea which confirms Hyperdynamics’ title to the Production Sharing Contract (PSC). It requires relinquishment of 64% of the current acreage by end 2009 and a review of the existing PSC by end March 2010.

GHANA

Ghana Is Angry At ExxonMobil, Ghana’s petroleum authorities are dissatisfied with the ways and means by which ExxonMobil, the world’s largest corporation, is trying to gain a foothold in the continent’s newest offshore exploranon play. Kosmos confirmed it had entered into an agreement with ExxonMobil but the Ghanaian government has said that the agreement is illegal and will not honor it.

“We have formally notified (Kosmos) that we do not recognize whatever agreement they reached with ExxonMobil – we told them we disapprove of it because it’s illegal,” a GNPC source was quoted as saying last week. The source said Kosmos had violated Ghanaian laws when it shared confidential exploration data with over 20 companies for its own commercial purposes without giving GNPC any prior notification.

…Wants To Buy Kosmos Jubilee Stake

Ghana National Petroleum Corp. has the funds to buy a stake in the Jubilee oil field from Kosmos Energy LLC, according to Kwame Ntow Amoah, head of economic evaluation and monitoring at the state-hydrocarbon company.

Ghana National, also known as GNPC, is in talks with Kosmos about the price and other issues and has secured the money from “at least two” banks, he said today by mobile phone from Accra. He declined to name the lenders or comment on the price.

GNPC will consider proposals from potential partners once the purchase is complete. he said. “The Chinese, the Americans, the British, all of them are welcome to bring proposals and we will look at them at the second stage,” Amoah said. GNPC could choose one company to work with or a combination of partners, he said, adding that there isn’t a date by which a decision on the sale must be made.

Ghana’s nascent oil industry, still a year away from production of oil for export, has attracted attention from some of the world’s top energy companies. British Petroleum too has been counted as one of those interested in Kosmos’ stake in Jubilee. In early October 2009, Kosmos said it had agreed to sell its Ghanaian assets, including its 23.49 percent stake in Jubilee, to Exxon Mobil Corp. for $4 billion. Ghana’s government disapproves of the agreement and is still in negotiations with Kosmos. Reserves estimates of Jubilee he has been said to range from 750MMBO to 2Billion by all sorts of analysts. GNPC already has a 13.75 percent stake in the field.

GABON Swiss independent Addax Petroleum, has acquired an additional 18.75% interest in the Gryphon Marin license area, bringing its total interest in the license area to 68.75%, prior to third party back-in options. Addax Petroleum is the operator of the Gryphon Marin license area, which covers a gross area of approximately 2,409,200 acres (9,750 km²) and lies immediately west of the Iris Marin and Ibekelia license areas, and immediately north of the Corporation’s Etame Marin license, offshore Gabon.

Addax plans to commence exploration activities on the acreage with the spudding of the Ajomba North and Pompano North prospect wells during the first half of 2009, a company release said. Addax Petroleum holds a 5 1.33% interest in the Iris Marin license area and a 31.36% interest in the Etame Marin license area. The Gryphon Marin license area is in an exploration period ending in November 2009 and carries a commitment to drill two wells. Addax Petroleum has budgeted to drill the Ajomba North and Pompano North prospects in the Gryphon Marin license area in the first half of 2009.

Canamens has signed a suite of agreements — including an Association Contract, a Petroleum Agreement and a Reconnaissance Contract, along with associated permits and a license — to explore for oil in Morocco.

These agreements were signed in Rabat on December 15, 2008 between Canamens and Morocco’s Office National Hydrocarbures et des Mines (ONHYM).

The first agreement is a Reconnaissance Contract in respect of the “Essaouira Shallow Offshore” area, located in shallow water (<500 metres). Canamens will reprocess and acquire new 2D seismic and following evaluation prospectivity, decide whether to convert the license to an exploration permit, or elect not to proceed.

The second and third agreements are an Association Contract and Petroleum Agreement which govern four Exploration Permits for a similar location but in deeper water (generally over 500 metres), the “Essaouira Deep Offshore” area. Under these agreements Canamens will reprocess and acquire new 2D seismic and, following evaluation, have the option to extend into a second period with an accompanying 3D seismic and drilling commitment, or drop without further obligation.

Under these agreements, which cover an area of over 11,000 square kilometres, Canamens will be the operator with a 75% equity stake in both the Reconnaissance Licence and the Exploration Permits, with the remaining equity held by ONHYM. Canamens will bear 100% of the costs up until the development stage. The agreements represent Canamens’ first investment in Morocco.

The Irish Operator Sells Off A Producing Asset In Congo In Favour Of Development of Spectacular Discoveries In Ghana and Uganda

WHEN TULLOW OIL ANNOUNCED it was selling off its interest in a 46,500BOPD field(2007 average) onshore Congo, some analysts wondered whether that wasn’t a lot to give up for a mid sized independent, especially in an era of high oil prices. The ostensible reason for selling was to raise cash to spend on the promising discoveries in deepwater Ghana and onshore Uganda.

Is that not losing a bird in the hand for two in the bush?

Afterall, deepwater development, at 1,200 metre water depth anywhere, is quite expensive and the Ugandan discoveries, which are over 1,200 km from the nearest seaport, don’t look, on paper at least, like an immediate cash cow.

The questions stopped when it was realized that the Irish operator was getting $435 million from the Korea National Oil Company for giving up about 5,000BOPD of the Mauriel et Prom operated M’boundi field. This is 11% stake. Tullow outrightly sold its subsidiary company – Tullow Congo Limited- to the Koreans. Mboundi is undergoing an injection of 1 0,000Barrels Of Water Per Day (BWPD) which will increase to 40,000BWPD by the end of 2008. Is this the evidence that the reservoirs are difficult to manage? “M’Boundi is now entering a new phase in its development at a time when Tullow is also looking to reallocate capital resources to projects where it has more material participation and influence”, Tullow said in a release.

Tullow’s cash flow comes mainly from Gabon, Equatorial Guinea and Cote Dlvoire, where assets are delivering over 35,000BOPD on a net basis. Tullow is going to be leveraging on the cash generated from fields in these countries as well as money from the Mboundi disposal to advance its appraisal and development programmes in Ghana and Uganda and to continue business development elsewhere.

For some reason, Tullow has been looking to get out of Congo. Two years ago, there was a buzz all over that the Irish owned operator would sell its 4%interests in the Moho-Bilondo, N’Kossa and N’ Soko exploitation permits offshore Congo to TOTAL for $72MM.

Tullow has also divested its 15% in Block 24, located in an unremarkable site off Angola. The acreage is in Benguela sub basin, where oil majors have endured a spate of dry holes. Tullow, however is keen on its 50% participation in Block 1/06, containing three undeveloped oil fields located in the prolific Lower Congo Basin. Tullow is equally bullish on Cote Dlvoire, where it has interest in the 27,000BOPD East and West Espoir fields with 3,000BOEPD of associated gas. Upgrading the processing facilities will increase the liquid handling capacity from 50,000 to 70,000 BFPD by early 2010. This upgrade could also facilitate a further infill drilling programme on East Espoir and the earlier tie-back of potential satellite fields. This is another reason to raise cash.

There are challenges here and there, of course.  Tullow is having a hard time convincing the Namibian authorities to move forward on the 1 .3tcfKudu gas project. The latest report is that Namcor, the state power utility, has dropped down Kudu Gas-to-Power project on the list of its priority power projects, describing it as marginal and a non- commercially viable standalone project, “as it is characterized by a high US dollar-denominated gas price, meaning that the foreign exchange and hedging cost will translate into high electricity tariffs.”

Tullow and its partners have commenced field development studies to ensure earliest first production of the deepwater Jubilee field(formerly known as Mahogany and Hyedua) off Ghana. Two rigs have been contracted to drill up to seven exploration and appraisal wells. In Uganda the Ngassa well was progressing as of the time of writing this report and the Butiaba multi-well programme was scheduled to commence in March on the Taitai prospect.

Tullow has been bullish on Uganda, but the uncertainties of the region cannot be dismissed out of hand. Operators here could easily find themselves in the crossfire between troops loyal to President Yoweri Museveni of Uganda and those who back Joseph Kabila of the Democratic Republic of Congo. The low intensity war in the Great lakes region can blow up in anyone’s face.

 CONGO

SOCO Exploration and Production Congo S.A. has agreed to farm-out 8.5% of its interest in the Marine XI block, offshore the Republic of Congo, to Petrovietnam Exploration Production. The deal is subject to government approval. SOCO EPC will remain the operator with a 29% working interest in the block. The remaining interests are held by Lundin Marine SARL (18.75%), Raffia Oil SARL (18.75%), the national oil company Société Nationale des Pétroles du Congo (15%), and Africa Oil & Gas (10%). The Marine XI block is in water depths ranging up to 110 metres and covers approximately 1,400 sq km. A multi-well drilling programme is scheduled for the second half of 2008.