Africa Oil - slowly progressing

Africa Oil published its 2016 financials last night - the USD850 million company (market capitalisation) ended the year with cash-in-hand of USD463 million. The release included few updates – G&A was down c.50% year-on-year as a result of lower equity-based payments and the impact of the weak Canadian dollar on head office salaries, and the company reported a small USD6.5 million write off on its Ethiopian assets. Attention remains focused on the Lokichar Basin development - preparations for FEED are underway, the pipeline Joint Development...

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Kosmos exploration - 2017 rising stars

With a strong balance sheet, cash flow generation in Ghana and exploration/development carry provided by BP through the recent Mauritania and Senegal deal, Kosmos is well positioned to focus on its 2017+ exploration drilling plans, which will "test some of the largest prospects identified by the industry". Despite its current gassy position in West Africa, management emphasises its confidence in finding higher value liquids: "Updated hydrocarbon...

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Premier refinancing terms agreed

Following an extensive negotiation process, the terms around the refinancing of Premier Oil’s debt have been agreed. This will be followed by “lock-ups” with lenders in February and final implementation by the end of May. On 3rd February, Premier Oil announced that it had agreed with key members of the “Private Lending” group on the refinancing terms. The terms include: Retaining the existing USD3.9 billion facilities with maturity extended to May 2021 Covenants relaxed to 7.5x in 2017, 5x by end 2018 and returning to 3x by 2019 Covenant net...

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Equalising the buyer and seller: Shell and Chrysaor's oil price contingent payment structure

After a tumultuous period of oil prices with investment decisions and M&A transactions put on hold, the outlook is beginning to stabilise in 2017. With more comfort on the near term trajectory of oil prices, the corporate mind-set is shifting from balance sheet management to strategic re-focussing and growth. Nevertheless, buyer-seller price expectation gaps still remain and a way to bridge this gap is the use of oil price contingent payments in a transaction. The last time this mechanism was seen in a major market deal was Seplat’s acquisition...

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Chrysaor future: Acquisition of Shell North Sea portfolio

On 31st January, Chrysaor announced that it had agreed to acquire a portfolio of North Sea assets from Shell for USD3 billion. The transaction is expected to close in H2 2017 and will transform Chrysaor into one of the largest North Sea focussed E&P companies, who will adopt 400 staff from Shell as part of the deal. The full-cycle portfolio, which comprises exploration, near-term development and production, produced 115mboepd in 2016 and...

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What E&Ps do best: EnQuest acquires North Sea assets from BP for USD85 million

EnQuest has agreed to acquire a package of assets from BP, which includes a 25% operated interest in the Magnus field and various infrastructure interests, adding 15.9mmboe of 2P reserves and 4.2mboepd or production. EnQuest will consolidate its infrastructure interests by acquiring 3% in the Sullom Voe Terminal (currently hold 3%), 9% of the Northern Leg Gas Pipeline (currently hold 5.9%) and 3.8% of the Ninian Pipeline System (currently hold...

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Taq Taq Tumble

At the end of October, we raised the prospect of a potential downgrade at Taq Taq following a disappointing production update from Genel. On 24th January, Genel provided updated guidance of 24-31mbopd production average for the field in 2017, down from 60.2mbopd in 2016. The declining production from the field has already been well publicised, however the scale of the fall was unexpected. A new field development plan and reserves estimates are being currently being prepared and expected to be published within the coming months. Capital investment...

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