PROACTIVE INVESTORS UK
This week, Cairn Energy (LON:CNE) became the latest offshore explorer to beat a trail to the waters off the coast of Morocco.
It will take a 50 per cent stake in the Foum Draa Block in a US$61.5 million deal with San Leon Energy (LON:SLE), Serica Energy (LON:SQZ) and Longreach & Gas (CVE:LOI).
Prior to the deal the three held stakes of 42.5 per cent, 25 per cent and 7.5 per cent respectively. After, they will have 14.17 per cent, 8.33 per cent and 2.5 per cent. ONYHM, Morocco’s oil and mining bureau, will maintain its 25 per cent interest.
As part of the deal Cairn has agreed to pay its share of past costs – a sum of US$1.5 million – and will find the first US$60 million required to drill an exploration well on Foum Draa.
For San Leon this is the second Moroccan farm-out in the space of less than a week after sealing a deal with acquisitive Genel Energy for its Sidi Moussa block.
Chairman Oisin Fanning said: “We are delighted to welcome Cairn Energy into this block that contains very large mapped prospects and we are now targeting our first Foum Draa exploration well in 2013.“This is deep water exploration and this deal reduces our financial exposure but keeps our interest at a level which still offers attractive upside for our shareholders.
“San Leon committed itself to carrying out extensive work offshore Morocco over the past two-and-a-half years and this farm-in agreement concludes the farm-out of our two offshore blocks.
“We also announced the successful farm-out of our offshore Sidi Moussa block to Genel Energy last week.
“Attracting partners like Cairn and Genel on the terms achieved is testament to the quality of work we have undertaken.”
Sector peer Aminex (LON:AEX) this week hailed a breakthrough six months in its interim statement.
The half year saw its exploration programme delivered spectacularly, and the firm also revealed it is in the final stages of negotiating a US$15 million loan to fund further work in Tanzania.
The major development was the company’s Ntorya discovery in the Ruvuma Basin, which has unlocked 1.17 trillion cubic feet of gas, or the equivalent of 195 million barrels of oil.
The Ntorya-1 discovery flow tested at 20.1 million standard cubic feet per day of gas, or the equivalent of 3,350 barrels of oil, as well as yielding an estimated 139 barrels a day of 53 degrees API condensate.
The company’s Nyuni and Ruvuma production sharing areas are now independently estimated to contain 11.4 trillion cubic feet of gas, which is the equivalent of 1.9 billion barrels of oil.
The group was able to increase its holding in Ruvuma to 75 per cent from 56.5 per cent.
Chief Executive Stuard Detmer said: “The first six months of the year have been transformational for Aminex’s position in Tanzania.”
Early this week, Range Resources (LON:RRL) revealed the disappointing news that the Shabeel North well, in the Puntland region of Somalia, did not encounter oil or gas in the well’s deeper target.
This comes after a shallower target encountered hydrocarbon shows but a drill stem test recovered only water. The previous Puntland well, drilled earlier this year, also had disappointing results.
The Shabeel North well will now be plugged and abandoned.
Range has a 20 per cent stake in the project which is operated by Horn Petroleum. And it now plans to focus its attention on its production and work-over operations in Trinidad.
The AIM quoted firm says it will continue to pursue interests in Puntland. And it will participate in more seismic and two more wells, within three years.
“All the participants in the historic two well programme in Puntland are disappointed that we didn’t strike a commercial discovery first up,” said executive director Peter Landau.
“What shouldn’t be underestimated is the achievement by both the Puntland Government and the joint venture in getting the 2 wells drilled and, more importantly, the continuing exploration program which should see another 2 wells drilled over the next 12 – 18 months.
“From a Range perspective, the continued focus on Trinidad production and development, the exploration programs in Colombia and Georgia, and the Texas sale process will drive the company moving forward in the short to the medium term.
“We will update shareholders later in the week with numerous positive developments in Trinidad and look forward to the imminent growth of our flagship Trinidad Projects both from a daily production and P1 Reserve perspective.”
This week, Range reported that the Shabeel North well was drilled to a depth of 3,919 metres. It penetrated 149 metres of interbedded sands and shales of the Triassic Adigrat Formation.
There were no oil or gas shows, and only miner porosity was exhibited on electric logs. These sands are similar to the Jesomma sands encountered in the previously drilled Shabeel well in respect of log response and oil and gas shows, Range said.
Petro Matad (LON:MATD), which is focused on Mongolia, has said it will spend up to US$47 million on exploration programmes on the XX block over the next five years.
This comes as the Mongolian authorities extended the exploration period under the production sharing contract (PSC) for the block.
While work at block XX has up until now focussed on the Davsan Tolgoi target, which disappointed last year, but the company says there is ‘additional exploration potential in the north of the XX block and the southern part of block contains six ‘promising’ sub-basins.
It says that both the northern and southern parts of the XX block warrant more detailed exploration and time is needed to build on the initial positive results.
“We welcome the extension together with the Government’s appreciation of the exploration processes, the progress that Petro Matad has made and the need to systematically explore the remainder of Block XX,” said chief executive Douglas McGay.
Petro Matad said that new expenditure commitments can be offset against previous expenditures that exceed past obligations under the PSC.
In other news, Heritage Oil (LON:HOIL) shareholders have agreed to the acquisition on a 45 per cent stake in block OML 30 in Nigeria.
Heritage originally intended to fund the acquisition with a rights issue but instead it raised US$156 mln through the sale of a 26 per cent stake in the Miran gas field in Kurdistan to Tony Hayward’s Genel (LON:GENL).
That gave Genel, formerly a minority partner, a 51 per cent stake in the venture, which analysts expect to become full control eventually.
Genel also lent Heritage US$294 loan as part of the deal, which can be repaid by the transfer of the remainder of its stake.
The Miran block is estimated to contain over 10 trillion cubic feet of gas.
Genel said the deal was an ‘excellent opportunity’ to progress its strategy of consolidating a leading position in Kurdistan.
Analysts expect Heritage’s remaining stake in Miran will be transferred to Genel now that the Nigerian transaction has been approved.Heritage says the Nigerian deal is very exciting and transformational for the company.
San Leon Energy (LON:SLE) and Nostra Terra Oil & Gas (LON:NTOG) also had news to report this week.
San Leon told investors that the Lelechow well has found oil and Nostra Terra revealed that it is acquiring a 20 per cent stake in the Chrisholm Trail prospect in Oklahoma.
Lelechow is the first of two exploration wells in San leon’s Nowa Sol concession.
The company says that initial evaluation of the results indicated that the well’s primary target, the Zechstein Main Dolomite, is highly fractured and contains moveable oil. And the oil was recovered to the surface, it said.
“It is very encouraging to be able to report oil in our first well on the Main Dolomite trend in Poland that resulted from our own 3D seismic survey and interpretation on the Nowa Sol Concession,” said chairman Oisin Fanning.
“We will only know the oil production potential and recovery rates once the well is completed, cleaned up and tested but are excited because the fractured nature of the Main Dolomite offers significant upside in the play.
“The company is now preparing to move the rig to begin drilling Czaslaw-SL1 well, our second well in the Main Dolomite trend.”
San Leaon said that the final completion of the well will incorporate an electrical submersible pump to continue to clean out the well and maximize oil flow rates. Testing is expected to resumed in the ‘next few weeks’, it added.
Nostra Terra said the Chrisholm Trail area hosts shallow oil targets and ‘liquids-rich’ natural gas. And the company says that there is proven success of horizontal drilling in the play as nearby wells have produced over 200 barrels per day in the first 30 days of production.
The first well of the venture is already permitted and drilling is slated for later this year.
“Chisholm Trail is an exciting prospect,” said chief executive Matt Lofgran.
“From the results of recent wells in the play these initial wells have the ability to be the largest producers in our growing portfolio, with a rapid payout, and an inventory of future potential locations.
“The first wells are already permitted and planned to drill this year thus increasing our activity level further from here.”
Nostra Terra is acquiring the stake through a deal with Ward Petroleum. It is gaining a non-operated 20 per cent stake. And the company’s share of the costs is expected to be US$300,000 for lease hold activities and a further US$720,000 for the drilling of three wells.
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