Siccar Point portfolio tidy-up

Siccar Point has an attractive long-term portfolio currently weighted developments. The portfolio includes a number of earlier stage opportunities. In November, the company took the opportunity to prune the portfolio - bringing in a partner on Lyon and selling Jackdaw to a more natural pair of hands.

On 21st November, Siccar Point announced that it had farmed out UK licences P1854 and P1935 to Ineos. The blocks are located in the West of Shetlands and contain the Lyon prospect which is estimated to contain 1-3tcf of recoverable gas. Ineos now has interests in all four fields that make up the Lyon gas cluster: Lyon, Tobermory, Bunnehaven and Cragganmore - this has the potential to be a future gas hub in the area. For Ineos, the transaction builds upon the recent acquisition of the DONG portfolio as it seeks to become a major UK oil & gas player. Post the farm-out, Siccar Point will hold 33.3% in the blocks with Ineos holding 66.6%.

At the beginning of the month, Siccar Point also announced the divestment of its 26% stake in three blocks covering the Jackdaw discovery to Dyas. Jackdaw is operated by Shell (74%) and is a HPHT field. The discovery lies in the J-Block area and is subject to sanction. The project was put on hold by BG in 2014, but continues to hold substantial gas resources that is expected to be monetised in the early 2020s.

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Statoil acquires Martin Linge from Total for USD1.45bn

Total has agreed to sell all of its interests in the Martin Linge field (51%) and Garantiana discovery (40%) on the Norwegian Continental Shelf to Statoil for USD1.45bn with an effective date of January 1st, 2017.Statoil will also receive remaining tax balances with a nominal post-tax value of more than USD 1 billion.

Martin Linge is a long life oil and gas development with estimated recoverable resources in excess of 300 mmboe. Originally scheduled to come onstream in 2017, first production is now expected in 2019 following a series of project delays and cost increases including a tragic accident at the Samsung ship yard in South Korea where the topside is being completed.

Martin Linge is being developed with a manned wellhead platform - the jacket substructure is already installed on location, while the topside is being completed at the Samsung yard in South-Korea and will be transported to Norway early 2018.

Operations will be controlled remotely from an onshore digital operations centre, enabling reduced operational expenditures. Electrification is made possible through a 160 km cable from shore, the longest AC power link in the world. This will reduce CO2 emissions by 200,000 tonnes per year. Following completion of the transaction, Statoil will increase from 19% to a 70% interest in the field.

Arnaud Breuillac, President, Exploration & Production at Total commented "The forthcoming acquisition of the Maersk Oil portfolio, which will make Total the second largest operator in the North Sea, leads us to review our portfolio in this area so as to focus on the assets in which Total will be able to generate synergies and reduce their breakeven points. In this context, given that Martin Linge is Total's only operated asset in Norway, there is limited scope to optimise operations, whereas with Statoil’s leading operating position on the Norwegian Continental Shelf, Statoil is in a better position to optimize this asset for the benefit of all stakeholders. We are therefore satisfied with the agreement with Statoil, a long time trusted partner, which in addition, offers us a satisfactory value for this asset. Norway remains a strategic country for Total as one of the largest contributors to the Group's production and we of course intend to continue bringing our expertise to Norway by focusing in particular on major non-operated assets such as Ekofisk, Snohvit and Johan Sverdrup."

Statoil's EVP for D&P Norway commented "This transaction adds competitive growth assets to our portfolio on the Norwegian continental shelf. The Martin Linge project features innovative solutions to enhance safety, capture value and reduce emissions, in line with our strategy. By leveraging Statoil’s operational experience and existing contracts, we can realise additional opportunities and synergies from these assets."

The transaction involves the transfer of relevant employees from Total to Statoil and remains subject to final due diligence and approval from the relevant authorities. The transaction will increase Statoil's stake in Martin Linge from 19% to 70% with the DFI holding the remaining 30%.

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Eni signs EPSA for Block 52 offshore Oman

The Government of the Sultanate of Oman, Oman Oil Company Exploration and Production ("OOCEP"), a subsidiary of state company Oman Oil Company ("OOC"), and Eni today entered into an Exploration and Production Sharing Agreement ("EPSA") for Block 52, located offshore Oman.

Block 52 is an underexplored area with hydrocarbons potential located offshore in the southern region of Oman. Block 52 has an area of approx. 90,000 Km2, with water depths ranging from 10 to over 3,000 meters. Pursuant to the EPSA, Eni is the Operator of the block, through its subsidiary Eni Oman B.V., with an 85% stake, whilst its partner OOCEP holds the remaining 15% stake.

During the same event, held in Muscat, Eni and Qatar Petroleum signed an agreement for the assignment of 30% interest in Block 52 to Qatar Petroleum. Following the conclusion of such agreement and subject to the consent of the competent authorities of the Sultanate of Oman, the Contractor under the EPSA will consist of affiliates of Eni with a 55% stake, Qatar Petroleum with 30% and OOCEP with 15%.

'The signing of the Block 52 EPSA represents an important milestone in Eni’s strategy to reinforce its presence in the Middle East region. We wish to establish with the Sultanate of Oman, which is a historical Oil & Gas producer in the region, a long-lasting relationship in the best tradition of Eni. It is also remarkable that, the same day, we are welcoming Qatar Petroleum as a partner in Block 52, to join our efforts with such a strong partner that is currently leading the LNG business worldwide', commented Eni CEO, Claudio Descalzi.

Block 52 was awarded to Eni and OOCEP following an international bid round process launched in October 2016.

Source: Eni

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Kurdish operators receive July crude export payments

Kurdish operators have announced receipt of oil sales payments from the KRG today towards July exports:
DNO has confirmed that the Tawke partners have received USD39.5 million
Genel has confirmed that the Taq Taq partners have received and USD10.4 million

These payments are in line with recent payments and should be the last under the "old" system (i.e. before the recent change in terms in exchange for settlement fo historical receivables).

Payment for August sales should be made in November - these should increase with DNO's greater share in Tawke and Genel's elimination of the 30% Capacity Building Payment. However, the recent referendum results casts uncertainty on the way forward between the neighbours in the region and therefore the risk to Kurdistan's financial position and therefore payments has increased.

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Catcher if you can

The Catcher FPSO has arrived on schedule into the North Sea. The vessel is currently at Nigg performing crew changes and resupply ahead of moving to the Catcher field location.

The field remains on track to come onstream by the end of the year. Tweleve wells have been completed ahead of first oil and drilling has been better than expected, encountering 30% more net pay with 40% better well deliverability. As a result, expected plateau production has increased by 20% to 60mboepd. There is potential for a reserves upgrades above the existing 96mmboe 2P. The well results also reduce the total wells required from 20 to 18.

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OPEC may extend yet

Saudi Arabia has been working tirelessly behind the scenes and appears to be gaining good momentum with the major actors of OPEC + 1 (i.e. Russia) for extending the OPEC output agreement beyond April 2018. Saudi Arabia and its new ally, Russia, are keenly in favour of maintaining the cuts until June 2018 and several other producers have recently signaled their support for an extension as well.

Iran: Initially one of the tougher partners at the November 2016 pact discussions given its demand to return to pre-sanction production levels, Iran has played along with the creation of the special cap arrangement. Iranian oil minister, Bijan Zanganeh, has indicated that the country “will cooperate with the majority” on any extension proposal.

Iraq: Has publicly been a vocal critic of the current arrangements arguing that it was not exempt from the cuts (like Libya and Nigeria) as it needed funding to fight the war with Islamic State. Iraqi oil minister, Jabbar al Luiebi, has also been critical of the fact that Iraq has not been allowed to use its own numbers for the calculation of the output cut). Up until now, Iraq has been sending mixed signals about whether it would actually agree to any extension. However the Saudi oil minister, Khalid al-Falih, has been working behind the scenes and made a special visit to Baghdad in May before the OPEC meeting to ensure that Iraq would agree to a 9-month timeframe. Saudi’s diplomatic efforts may have paid off as Iraq is now softening its tone and affirming its commitment to the current agreement; in August 2017, Luiebi stated during a visit to Moscow that it would go along with an extension if one is agreed.

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Senegal moves ahead

Cairn Energy, the operator of the SNE field in Senegal, released a resource update on 22^nd August as part of its half-year announcement.

The updated 2C resource base is 563mmbbl gross (vs. 473mmbbl in May 2016) and now brings it in line with Woodside's estimate of 560mmbbl, but is still far below that of partner FAR which carries 641mmbbl (assessed by RISC). The differing resource estimates is nothing new and we constantly see the other partners playing catch-up with FAR.

Focus is now on FEED with no further drilling planned until after FID. It is envisaged that SNE will undertake a phased development with the initial phase targeting the lower 500 series sands and core area of the upper 400 series sands. The second phase will target the remainder of the 400 series and more outreach parts of the field.

Gross capex is currently estimated at USD2.3 bn, but could come down as the engineering is defined and possibility of Woodside bringing in an existing FPSO. FID for Phase 1 is planned for the end of 2018 with first oil in 2021 and an initial plateau of 75-125mbopd.

The partners are Cairn 40%, Woodside 35%, FAR 15% and Petrosen 10% (Petrosen has the option to increase its interest to 18% during the development phase).

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