All articles in the Farm in, Farm Out Section:

DNO ASA, the Norwegian oil and gas operator, has entered into a transaction agreement in which RAK Petroleum plc will transfer its ownership of Mondoil Enterprises LLC to DNO. The all-share transaction comprises Mondoil Enterprises’ 33.33% indirect interest in privately-held Foxtrot International LDC whose principal assets are operated stakes in offshore production of gas and associated liquids in Côte d’Ivoire, forming a bridgehead for DNO in West Africa.

“The move into Côte d’Ivoire is an important first step into a highly prospective region offering a broad set of growth opportunities through acquisition of producing fields, development assets and exploration licenses,” said Bjørn Dale, DNO’s Managing Director. The Company is already evaluating other opportunities in the region, he added.

Foxtrot International holds a 27.27% interest in and operatorship of Block CI-27 offshore Côte d’Ivoire containing the country’s largest reserves of gas, produced together with condensate and oil, from four offshore fields tied back to two fixed platforms, meeting more than three-quarters of the country’s gas needs. Foxtrot International also operates an exploration license offshore Côte d’Ivoire, Block CI-12, in which it holds a 24% interest.

In addition to the Foxtrot gas field, which began production in 1999, Block CI-27 contains the Mahi gas field, developed in 2012, as well as the Marlin oil and gas field and the Manta gas field which began production in 2016, following a four-year, $1Billion development campaign by the joint venture. Gas produced from these fields is transported by pipeline to fuel power stations in Abidjan pursuant to a gas sale and purchase (take-or-pay) agreement put into force in June 1999 and subsequently increased to 140 million cubic feet per day with a base price of $ 6.00 per MMBtu, subject to an indexation formula which has lifted the current price to $ 6.47 per MMBtu.

This asset is big deal: In early 2020, the Block CI-27 joint venture embarked on a two-year, $350Million field development and onshore facilities construction project to supply gas to two new power stations

In early 2020, in connection with the signature of amendments and extension of the production sharing contract and the gas sales agreement to 2034, the Block CI-27 joint venture embarked on a two-year, $350Million field development and onshore facilities construction project to supply gas to two new power stations. Cash flow from operations have funded these capital investments. This work is nearing completion following the drilling of three new and two side-track wells; the last well in the programme, a side-track, is currently progressing.

This additional processing and well capacity are slated to increase gas supply to over 230 million cubic feet per day, subject to electricity sector demand and well performance. Drilling of up to another two wells over the period of the extension is planned to maintain the higher production capacity of the license. During the first half of 2022, gross sales averaged 200Million cubic feet of gas and 1,500 barrels of oil and condensate per day. Oil and condensate (and limited quantities of gas) are sold to the local refinery at arms-length prices. www.foxtrot-international.com

The effective date of the transaction is 1 January 2022 and the agreed consideration is $ 117.25Million, covering transfer of 100% of Mondoil Enterprises share capital valued at $ 95Million, comprising 9.09% indirect working interest in Block CI-27 and 8% in Block CI-12 both held through the ownership in Foxtrot International, and $ 22.25Million including $ 21Million in cash and $ 1.25Million in working capital.

Completion of the transaction is conditional upon shareholder approval at an extraordinary general meeting of DNO resolving to issue the consideration shares. The formal notice of the extraordinary general meeting of DNO to be held on 13 September 2022 is attached and provides further information on the proceedings as well as a description of the terms and conditions of the transaction agreement. RAK Petroleum, too, will hold an extraordinary general meeting to seek shareholder approval of the capital repayment plan.

DNO says it has conducted a due diligence of the assets to be acquired supported by third-party assessment of reserves and resources. The transaction has been negotiated by the independent members of DNO’s Board of Directors who, in addition to the attractive business merits also considered the advantage of increasing the Company’s free float to attract institutional investors and of augmenting DNO’s gas exposure to reduce its carbon footprint. Pareto Securities AS has been retained as financial advisor to DNO and has provided the independent directors with a fairness opinion.

By Adeniyi Adeoloye

Mergers in the oil industry have a long history. The break-up of Standard Oil and the attendant amalgamations of forerunner companies to forming the 7 sisters are perfect examples of mergers in the days of old. When they are done, such coalitions allow partnering companies to pull resources together to deepen expertise and grow competitive advantage. This thinking is reinforced by Claudio Descalzi, CEO of the Italian major ENI with his take on the creation of Azule Energy – “a new, strong entity is born, which combines our experience, skills and technologies with those of our partner bp, putting them at the service of the development of Angolan energy resources, with a priority commitment to environmental protection and the growth of the economy.”

Many mergers have happened in the oil industry, but most have been in such a way that the union is recorded across the global operations of the entities concerned. So it is interesting to see Azule Energy, a child of two European majors after combining their entire operations in Angola, to mint a new company, with both parties having 50:50 equity shares have a merger that is only limited to Angola and no other jurisdictions where bp and ENI operates.

Before the coming together, bp’s entire production in the year 2021 was roughly 100,000 barrels of oil equivalent per day(BOEPD), whilst ENI, its equity partner in Azule Energy did 120,000BOEPD. Prior, French major, TOTALEnergies prided herself as number one operator in Angola given her output of 175,000BOEPD 2021, 212,000BOEPD in 2020 and 232,000BOEPD in 2019. The 2021 production of TotalEnergies is some 17% decrease compared to her output in year 2020 and a further 24% contraction in contrast to the throughput of 2019.

The newly formed Azule Energy which claims to be Angola largest independent holds 2 billion barrels of net resources with an ambition to grow production to 250kboe/d in the next five years from the current net of  about 220kboe/d that was produced by Eni and bp in 2021.

Going by the average production of TOTALEnergies in Angola between 2019 and 2021, and particularly if it ramps up production to hit the scope of what it achieved in 2019; in addition to projects it is having in the pipeline like Begonia whose FID has been taken and commissioning expected in 2024 with planned output of 30,000BOPD, the Quiluma and Maboqueiro non associated natural gas projects with first gas scheduled for 2026, and the ramping up of Zinia phase 2 project to pump 40,000 bopd, it is clear that the claim to leadership by the newly minted Azule Energy’s  total production will be severely tested, if not pushed aside by o the French energy giant by 2027, when Azule is looking to achieve 250,000BOEPD. Could this be why bp and ENI chose to call their new company “Angola’s largest independent”?

Adeoloye,  a Dublin based petroleum geoscientist, is a frequent contributor to Africa Oil+Gas Report

The report of the revamped production on the Oza field, onshore eastern Nigeria, effectively announces the return of Wade Cherwaycko to the country’s oilfield activity.

Cherwayko is the spine behind Decklar Resources, the Toronto listed firm which has taken control of three marginal fields in Nigeria in the last three years.

The Oza field was the first asset the company moved on to, when in April 2019, it concluded an RFTSA with Millenium Oil &Gas, operator of Oza Field (one of the marginal fields awarded in 2004).

After re-entry into Oza-1 well, which had been produced sub optimally  by Millenium Oil& Gas  Decklar Resources announced resumption of production at Oza, at an averaged, stabilized production rate of 1,184 barrels of oil per day (BOPD) of 23 degree API sweet crude oil and flowing tubing head pressure of 400 psig with zero BS&W and an average gas oil ratio of 71 mcf/bbl. Production flows into storage tanks at the Oza Oil Field and then will be delivered by truck to the Umugini Pipeline Infrastructure Limited crude handling facilities.

The Asaramatoru field is the second field in Decklar’s basket. In July 2021, the Canadian minnow announced the completion of a Share Purchase Agreement to purchase all of the issued and outstanding ordinary shares of Purion Energy Limited, a Nigerian entity that had entered into a RFTSA with Prime Exploration and Production Limited, the Operator of the Asaramatoru Oil Field.

In June 2022, Decklar announced the purchase of all of the issued and outstanding ordinary shares of Westfield, a Nigerian entity that had entered into a Risk Finance and Technical Services Agreement (RFTSA) with Erebiina Energy Resources Limited to participate in the Emohua Field in Nigeria, located in Oil Mining Lease (OML) 22, onshore eastern Nigeria.

What these deals mean is that Decklar Resources Inc is targeting a list of Nigerian independents struggling with financing and technical capability to continue developing their assets.

The striking thing is that the holders of Emohua field were only granted the licence to the field in late June 2022, as the field is one of those in the just concluded 2020 Marginal field bid round.

What these deals mean is that Decklar Resources Inc is targeting a list of Nigerian independents struggling with financing and technical capability to continue developing their assets.

This role is reminiscent of what Mart Resources, an earlier vehicle that Mr. Cherwayko championed, played in the Nigerian oil industry in the 2000s.

Indeed, Wade Cherwayko first showed up in Nigeria in the early 1990s, with his Toronto-listed minnow, Abacan Resources, with which he farmed into two Nigerian offshore licences. The company eventually went belly-up. He reappeared in 2003 during the first marginal fields bid round and farmed in and funded four marginal fields, the star one of which was the Umusadege Field, won by Midwestern Oil and Gas Limited. He and his Mart Resources brought the field to a peak production of 27,000Barrels of Oil Per Day. He eventually collapsed Mart into MidWestern and, together with other investors, they founded Eroton, which won the bid (jointly with Sahara Energy) to acquire Oil Mining Lease (OML) 18 from the Shell partnership in 2015. With that deal, Cherwayko moved far away from the nuts and bolts of things. He returned to the  Marginal Fields terrain in 2019 with another Toronto-listed minnow, Decklar Resources. The success of Decklar in Oza’s revamp is a statement. Cherwayko is signaling: watch this space

This article was adapted from a piece published two months ago in the May 2022 edition of the Africa Oil+Gas Report.

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.

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”.