Map of the day: Ghana near-field tiebacks and upsides

#Ghana #Jubilee #Kosmos #TEN #Tullow

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Kosmos hit by rig contract as dry hole is announced in Suriname

Kosmos could be liable for a share of the onerous contract in Ghana entered into by Tullow Oil, operator of the Jubilee and TEN fields. This could equate to over USD100 million for Kosmos which would wipe out Q2 2018 revenues and earnings since the beginning of the year.

Tullow, on behalf of the field partners entered into a long-term rig contract for the West Leo rig in 2012 for work in the Jubilee and TEN area. In 2016, Tullow declared force majeure under the contract, driven by the border dispute between Ghana and Côte d’Ivoire which forbid any further drilling around the TEN fields until the matter was resolved.

Although the partners had a choice to redeploy the rig at the Jubilee field to undertake further work, it decided not to given issues with the FPSO turret and therefore uncertainty over ongoing development at the field. In an effort to save costs, the partners declared force majeure on the rig contract, which England’s Commercial Court has now ruled was not a valid reason to trigger force majeure. The liability between the TEN and Jubilee partners stands at USD254 million.

This comes on the back of bad news for Kosmos in Suriname where the Anapai-1 well was dry. This extends the dry run of Kosmos and follows the high profile dry well at Requin Tigre (see Kosmos' end of a winning streak with dry well at Requin Tigre).

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Tullow: An African update

Tullow provided a trading update today which gives an overview on progress across a selection of Africa's key fields and developments.

Ghana

• Production in Q1 2018 at Jubilee averaged 63.8 mbopd - there were 19 days of shut-ins throughout the period. An updated shut-in/maintenance schedule plans for three weeks of downtime in May and one week at year end for a total of 47 days. Tullow’s production is insured at c.USD60/bbl, but with Brent to date hovering above USD70/bbl the company is incentivised to minimise down time.

• TEN production performed strongly at 68.6b mbbl/d.

Equatorial Guinea

• Ceiba and Okume in Equatorial Guinea performed "particularly well".

• These fields are under new ownership with Kosmos and Trident Energy's entry in October 2017, acquiring Hess' stake for USD650 million.

Uganda

• FID on Lake Albert is now expected in H2 2018 and the JV continues to await approval of the farm-out to CNOOC and TOTAL.

Kenya

• The appraisal campaign continues to be positive with the project slowly moving forward.

• The FEED contract is expected to be awarded imminently, and trucking for the Early Oil Production Scheme is scheduled to commence in the coming months.

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Aker Energy buys Hess’ Ghana business

Aker Energy, a 50-50 JV between Aker and TRG, has acquired Hess’ 40% interest in Deepwater Tano Cape Three Points, offshore Ghana for USD100 million, with USD25 million payable at close and a further USD75 million payable on PDO approval.

The block lies south of the Jubilee and TEN blocks operated by Tullow and covers over c.2,100km² with a 2C resource estimate of ~550mmbbl. Aker will present a development plan for the block later this year with the first phase targeting c.400mmbbl using a FPSO with a subsea production system. First oil is anticipated in 2021.

The ultra-deepwater block (~2,000-2,500m depth) contains seven discoveries. Hess declared commerciality on four of the fields in March 2016 with Pecan identified as the development hub. However, with the fields straddling the Ghanaian / Cote d'Ivoire border and the ongoing dispute at the time, the partners were unable to apply for a development licence. With the border dispute now settled, the development can now go ahead.

Post transaction, the ownership of the block will be Aker Energy (40%), Lukoil (50%) and GNPC (10%) The development helps Ghana develop its hydrocarbon resources beyond TEN and Jubilee which currently produce c.200mboe/d.

Hess: Deepwater Tano Cape Three Points drilling results (2015)

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