All posts tagged feature


TOTAL Averages 377,000Barrels A Day in Angola’s Block 17

By Toyin Akinosho

French major TOTAL produced 377,673.9Barrels of Oil Per Day (BOPD) on average (operated, gross) in Block 17 in November 2020.

The French major was also active with the drill bit in the country, utilizing Maersk Drilling’s Maersk Voyager, on Block 17.

Chevron’s operated shallow water Block O produced 195,453BOPD.

BP’s operated deepwater Block 32 averaged 188,617BOPD in the month whereas ExxonMobil ‘s Block 15 averaged 129,763BOPD, according to figures from Angola’s Ministry of Finance.

The British player was the most active with the drillbit, utilizing Enso’s DS12 on Block 18 and Transocean’s Skyros on Block 32, reports.

Angola’s oil production in November 2020 was 36,559,945 barrels and corresponds to an average of 1,218,665Barrels of Oil Per Day (BOPD), reports the Angolan Oil, Gas and Biofuels Energy Agency (ANPG), the country’s hydrocarbon regulator.


LEKOIL Asks Shareholders to Rebuff Metallon’s “Attempt to Take Control”

By Macson Obojemuenmoin

LEKOIL has told its shareholders that the requisition by Metallon Corporation, proposing three names to act as directors of LEKOIL, is “no more than an ill-disguised attempt by Metallon to gain control of your Company without paying a price to all shareholders that reflects the intrinsic value of the business and assets of the Company”.

It argues, in the letter, that Metallon is a poorly run gold mining firm with no idea about how to manage the affairs of a hydrocarbon, E&P business.

LEKOIL’s briefing suggests that it has clearly scrutinized Metallon’s financials, and determined that “Metallon has identified LEKOIL’s assets as an opportunity to address its own financial challenges”. If all of Metallon’s Requisitioned Resolutions are passed, LEKOIL’s Board contends, “Metallon’s appointees would represent 50% of the directors on the Board and, if Michael Ajukwu is elected Chairman, they will also have the casting vote. The Board does not believe that it would be appropriate for a c.15% shareholder, to enjoy that level of Board representation and control over the Company”.

Background: On 15 November 2020, LEKOIL received notice from Strand Hanson of its resignation as the Company’s nominated adviser, with effect from close of business on 20 November 2020 (resulting in trading in the Company’s shares being suspended from 23 November 2020). On the same date that Strand Hanson’s resignation took effect, the Company received Metallon’s requisition notice (together with the consent of the three proposed directors to act as directors of the Company).

LEKOIL’s letter is a blistering response to Metallon’s charges, in its requisition, that “a lack of accountability of management by the Board has led to shareholder value being destroyed.”

Metallon had raised the following concerns:

  • LEKOIL has raised over $264Million of equity from shareholders since listing in 2013. The Company’s shares were suspended on 23 November 2020 with a market cap of $13Million.
  • During this period LEKOIL has spent $129Million on General and Administrative (G&A) Expenditure and invested $210Million into Oil & Gas activities but delivered no production growth at Otakikpo (marginal field) since first oil in 2017.
  • The Board has continually missed the market expectations it sets, with production levels at Otakikpo averaging 5,676 barrels of oil per day (BOPD) (gross) in H1 2020, despite setting targets of 10,000 BOPD by 2017 year-end and 20,000 BOPD in 2020.
  • Otakikpo, its only asset generating returns, has been starved of investment whilst G&A and other costs remain at extremely elevated levels.
  • Since its listing, the Board has awarded the CEO a total remuneration of over $10Million, close to the current market capitalisation of LEKOIL. It also recently entered into a related party transaction to extend a material part of the longstanding $1.8Million Directors loan to the CEO at a time when the Company is short of cash.

LEKOIL describes Metallon’s assertion that close to half of the equity raised has been spent on G&A as incorrect. “In fact, of the $275.5Million equity raised since listing in 2013, $166.2Million was invested in capital expenditure for the development of Oil Prospecting Lease (OPL) 310, OPL 325 and Otakikpo, with only $73.3Million (which represents, 27%) going towards G&A expenditure. To date, taking into account all sources of funding for the Company (including debt and proceeds from production), G&A expenditure would represent 28% of total funds raised or generated. Further, the Company would like to clarify that the cash component of the Chief Executive Officer’s total remuneration is $7.9Million over a period of seven years, with the balance in the form of share awards and stock options. The Chief Executive’s total remuneration since Admission of $10.6Million is included in the total G&A expenditure referred to above”.

Metallon became LEKOIL’s largest shareholder after it acquired a 15.10% interest in LEKOIL’s shares between 16 June 2020 and end August 2020. LEKOL’s share price between 1 June and 3 August 2020 ranged between 2.6p and 2.75p. The Company’s share price on the last day before suspension of trading on 20th November 2020 was 1.75p.

“Metallon has been a shareholder for less than six months”, LEKOIL notes. “Shareholders are urged to undertake their own due diligence on Metallon”.

The major areas of significant concern to LEKOIL’s board, “centre on the violation of foreign exchange control regulations in Zimbabwe; winding-up petitions from several creditors leading to a winding up order of the High Court; the distressed state of Metallon’s gold mines in Zimbabwe; and the failure to remunerate employees – all of which are a matter of public record”.

Noting that Metallon has no expertise or track record in oil and gas development, LEKOIL’s board testifies that “Metallon’s gold mining operations have fared poorly over the years and contracted from at least four mines in 2002 to just one operating mine at present”.  The board also charges that “whilst Metallon claims to be a natural resources and infrastructure investment company, it is not apparent from its most recently filed 2018 financial statements that it has interests in infrastructure.

“Prior to its investment in LEKOIL, its only asset was its interest in its Zimbabwe gold mines”.

LEKOIL points to Metallon’s payables as being almost two times its 2018 revenues, going by its annual revenues of $79Million, as; “operating cash flow of $3.9Million would be negative if $51.9Million of overdue payables had been settled. If overdue payables had been settled, Metallon’s operating cash flow would be negative $48Million;  one of the only reasons the company is now considered a going concern given its negative equity, is that it has sales of two subsidiary goldfields in December 2020 (possibly explaining the reason for the very late filing of the 2018 accounts

Metallon says it is categorically not seeking to take control of LEKOIL and is not working in concert with any other shareholders. “We believe LEKOIL’s assets, specifically Otakikpo, are being substantially undervalued by the market and that the value of these assets could be realised if the proposed changes are made to the LEKOIL Board. Since notice of the requisition was given on 19 November, we are aware that a significant number of shareholders have the same concerns regarding the Board’s lack of governance and oversight of management”.


Savannah Inks Revised Gas Sales Agreement with Lafarge

New deal comes with a price of $7.5 per thousand cubic feet of gas

Savannah’s Accugas subsidiary has entered into a revised Gas Sales Agreement GSA with Lafarge Africa for the supply of gas to its Mfamosing cement plant in Cross River State, Nigeria.

The company says the new deal “establishes a more sustainable long-term contractual position for the benefit of both parties”.

The revised GSA sees the contract term with Lafarge extended for a further five years to January 2037, giving a remaining contract life of 17 years.  The new agreement also allows for an increase in the gas sales price from 2027, with additional US-Consumer Price Index indexation from 1 January 2029.

The revised GSA has a reduction in the daily contracted quantity (DCQ) of gas from 38.7 MMscf/d to 24.2 MMscf/d. This reduction in the DCQ will allow Accugas to release approximately 12 MMscf/d of currently reserved gas processing capacity at its Central Processing Facility (CPF), enabling Accugas to enter into additional long-term GSAs for these volumes, which will increase the business’ future revenues and cashflow potential.

To compensate Accugas for this reduction in DCQ, the revised GSA includes an advance payment of $20Million and a prepayment structure over the period to 2027, which effectively results in a gas price of $7.50/Mscf on take-or-pay volumes during this period.  “This revised structure also allows Lafarge to utilise its accumulated make-up gas balance of approximately $58Million, whilst we have preserved the capacity to supply higher volumes when these are required by Lafarge”, Savannah says in a statement. “Lafarge’s commitments under the revised GSA will continue to be guaranteed by an international investment grade bank guarantee.

“Overall, the revised terms are expected to have a cumulative positive impact on Accugas’ cash flows over the short and medium term. Following the agreement, Accugas’ aggregate maintenance-adjusted take or pay volume will reduce from 141.4 MMscf/d to 131.8 MMscf/d.


No Oil, Only Gas, in the Future of Sasol

By Fleetwood Grobler Sasol’s President and Chief Executive Officer

 

 

 

 

 

 

 

Future Sasol will comprise two market-focused businesses, Chemicals and Energy.

A key decision as a result of this is the discontinuation of all oil growth activities in West Africa and

resizing our upstream portfolio to focus on gas.

The revision of our strategy aims to have a greater focus on value realization for all stakeholders, business sustainability and enhanced cash generation. It acknowledges the need to streamline what was

previously a complex and wide portfolio.

The Chemicals Business will transform our portfolio towards specialty chemicals in which we enjoy differentiated capabilities and strong market positions that can be expanded over time. We will continue to focus on our commodity chemicals portfolio, however this will diminish over time as we focus more on specialty chemicals.

The Energy Business comprises the Southern African value chain and associated assets and will be positioned for higher cash generation through improved margins, cost efficiency and divesting of assets with low returns. This business will also pursue Greenhouse Gas (GHG) reduction through a focus on gas as a key complementary feedstock and renewables as a secondary energy source. These will be critical enablers to achieve our 2030 GHG reduction target and our longer-term sustainability aspirations.

These two businesses will be fully accountable for profit and loss, management of resources and capabilities. A lean corporate centre will enable the businesses by fostering synergies and integrating activities, setting strategic boundaries and allocating capital. These developments will support improved financial returns.

In tandem, resetting our strategy necessitated a revised operating model, which will become effective on 1 November 2020. The top leadership structure has already been realigned and optimised to enable this new model.

Our intent with Future Sasol is to deliver a Group that is streamlined, focused and positioned to succeed. It is therefore a matter of much regret that not all our employees will be able to make the journey to the new Sasol. In this, unfortunately, we have no choice. We have to put the sustainability of Sasol first, and the steps we are following are taken with only this in mind.

Future Sasol will not only look different, it will behave differently, requiring a change in culture and ways of working, and will be more open to partnering arrangements. It will remain heavily committed to South Africa and plans to work closely with the government to align with the country’s energy and economic goals.

-Sasolburg, August 21, 2020

Published for the benefit of paying subscribers in the August 2020 edition of Africa Oil+Gas Report


Waltersmith Formally Gets Seplat’s Nod as a Supplier of Refinery Feedstock

Seplat Petroleum has formally signed off on an agreement to supply between 2,000 and 4,000 Barrels of Oil Per Day from its working-interest production fin the Ohaji South Field in Oil Mining Lease (OML) 53 to Waltersmith Petroman Limited’s just completed 5,000BOPD capacity refinery in Ibigwe, in the east of Nigeria

Seplat, a Nigerian independent listed on both the Nigerian Stock Exchange and the London Stock Exchange, has operated output of about 7,000BOPD in the field at optimum, of which 2,800BOPD is its current, optimal working interest.

Previously, Seplat’s share of Ohaji South crude was primarily evacuated to the export Terminal via a third-party Crude Handling Agreement with Waltersmith.

“This new agreement benefits Seplat by selling its crude oil directly to Waltersmith for refining, thereby eliminating crude losses and downtime experienced along the evacuation and export route. The transaction would also boost the capacity of Waltersmith in providing its products particularly to the immediate region of our operations thereby supporting Seplat’s commitment to national energy security”, Seplat says in a release.

“This Crude Purchase Agreement with Waltersmith ensures that Nigerian crude will be refined locally by a Nigerian refiner”, says Roger Brown, Seplat’s CEO. “The agreement will eliminate losses we previously experienced on the export pipeline, meaning more revenue will be booked by Seplat for the same amount of oil produced from the field. Waltersmith’s refinery will also benefit the Nigerian economy by creating local jobs to refine our oil.”

Seplat maintains its guidance of 48,000 – 52,000BOEPD for the 2020 financial year.


Suez Canal Drops Transit Fees Further More

As the Egyptian government tries to support revenues, with the pandemic hammering trade, shippers of Liquified Petroleum Gas on the Suez Canal will continue to pay lower transit fees until June 2021.

Carriers traveling between southeast Asia and the United States have gotten breaks ranging between 24% and 75% since April, depending on their route.

The measures were introduced by the Suez Canal Authority in response to a slowdown in global trade caused by the pandemic.

The SCA has also reduced transit fees for large oil tankers traveling between northern Europe and southeast Asia by 48%.

“The authority granted discounts to shipping lines as marketing tools to attract ships that use other alternative routes”, reports Al Mal, the authoritative Egyptian newspaper. These routes are chiefly the Cape of Good Hope, and the fees are “based on a study of the costs of operating a ship’s transit voyage in the Suez Canal, compared to other alternative channels, especially since crossing these routes takes a long time without payment of Transit fees, compared with the Suez Canal “, Al Mal reports.


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”.


NNPC Poaches an EITI Insider to Manage its EITI Compliance

Nigeria National Petroleum Corporation NNPC has poached a manager from inside the EITI to run its EITI Implementation Programme.
EITI is Extractive Industries Transparency Initiative, an international organization that advocates for  global standard for the good governance of oil, gas and mineral resources.

Murjanatu Ibrahim Gamawa is   the EITI Country Manager in charge of coordinating implementation of EITI standards across Anglophone Africa. She also reviews and analyses EITI Reports, Annual Progress Reports, work plans, Terms of Reference and other country documents, and participates in the International Secretariat’s work on assessment of progress with meeting the EITI’s validation requirements.

Gamawa will help the state hydrocarbon company to drive speedy attainment of the EITI requirements across its operations. The NNPC says that her appointment, which will take effect from January 2021, is a practical step towards entrenching the culture of transparency in the Corporation.

Gamawa’s previous experience includes working for Nigeria EITI as a petroleum analyst and subsequently as the oil and gas team leader. Gamawa holds a B.Sc. in Geology from the University of Maiduguri, Nigeria, an M.Sc. in Petroleum Geoscience from the Imperial College London and an MBA in Energy Management with distinction from the University of Aberdeen, Scotland. Her professional interests are related to natural resource management and public financial management.


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”.


Angola Invites Tenders for Logistics Services for Kassanje Basin Study

Angola’s NATIONAL AGENCY FOR PETROLEUM GAS AND BIOFUELS (ANPG) has thrown open the tender for Acquisition of Assistance and Logistical Support Services for the North and South Lots of the Kassanje Basin, within the scope of the Petroleum Potential Study Project of the Interior Basins of Angola.

Deadline and place for the Submission of Applications: Until December 30, 2020 at 3 pm

Contract performance period: 12 months.

Fuller description of the tender is in this link

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