Maersk Drilling exits Egyptian JV in line with strategy

Maersk continues to review and streamline its business portfolio. As part of that strategy, it announced today of its exit of the Egyptian rig company joint venture.

Press release
A.P. Møller - Mærsk A/S ("A.P. Moller - Maersk") and Egyptian General Petroleum Corporation ("EGPC") has today signed an agreement whereby EGPC will acquire A.P. Moller - Maersk’s 50 percent shareholding in Egyptian Drilling Company ("EDC") for USD 100m in an all-cash transaction.

Following the transaction EGPC will become sole owner of EDC and will as part of the agreement take over the entire portfolio, obligations and rights. EDC is one of the leading drilling operators in the Middle East and operates 70 rigs in total of which the vast majority are land based drilling rigs.

The divestment of EDC is in line with Maersk Drilling’s strategy to focus on offshore drilling in the harsh environment and deepwater markets.

“I am very pleased with this agreement with EGPC. The divestment is a natural consequence of our announced long-term plans to exit the EDC joint venture, when the timing was right. EDC has a very strong position in the Middle East, and I am confident that the new ownership will enable EDC to develop its business and capabilities even further,” says Jørn Madsen, CEO of Maersk Drilling.

EDC began operations in 1976 as a 50/50 joint venture between Maersk Drilling and EGPC, which is owned by the Ministry of Petroleum and Mineral Resources in Egypt. EDC employs approximately 5,000 people, whereof 34 are Maersk Drilling employees. Maersk Drilling is currently looking into future job opportunities for its employees in EDC.

Source: https://www.maerskdrilling.com/en/media-center/press-release-archive/2017/12/maersk-exits-egyptian-drilling-company-joint-venture

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CNPC could take over Total's interests in Iran

CNPC is considering taking over Total's stake in a the giant South Pars development if Total needs to exit Iran to comply with any new U.S. sanctions. In October, President Trump refused to certify Iran's compliance with the nuclear deal leading to a Congressional vote on whether to reimpose sanctions on Iran.

The date of the vote has not yet been set , but if sanctions are reimposed they could prohibit companies working in Iran from also operating in the United States. For Total, the stakes are high, where they have much larger operations in the United States.

Total signed the USD1 billion deal to develop the South Pars gas field in July. However, the contract provided mechanisms to allow Total to pull out in the case of sanctions imposition, whereby CNPC has the option to take over Total's stake. CNPC could take over Total's 50.1% interest and become operator of the project if Total is forced to withdraw from Iran. CNPC has a 30% stake, while the Iranian national oil company's subsidiary PetroPars holds the remaining 19.9%. If this goes ahead, then CNPC would shoulder 80.5% of the cost of the project, estimated at $2 billion for the first stage.

Any change would also delay the project as Total is already in discussion with service companies and is expected to award contracts early next year.

The South Pars project will have a production capacity of 2bcf/d plus condensates, Total has said. It would start supplying the Iranian domestic market starting in 2021.

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Aker BP submits three PDOs

Aker BP ASA (Aker BP) has submitted the Plans for Development and Operations ("PDOs") for the Valhall Flank West, Ærfugl (formerly Snadd) and Skogul (formerly Storklakken) fields to the Norwegian Ministry of Petroleum and Energy.


Valhall Flank East
This development represents an extension on the western Flank of the Valhall field. It will be developed from a new Normally Unmanned Installation and will be tied back to the Valhall field centre. The platform will be fully electrified and operated remotely from Valhall. Recoverable reserves are estimated at 60mmboe to be drained using six producers with first oil planned for Q4 2019.

Field partners are AkerBP (35.95%) and Hess Norge (64.05%). Aker is in the process of acquiring Hess Norge and has entered into an agreement to farm-down 10% to Pandion Energy.


Ærfugl (formerly Snadd)
This is a gas condensate field near the AkerBP operated Skarv FPSO. The PDO covers the full-field development and includes the resources in both the Ærfugl and Snadd Outer fields which are planned to be developed in two phases.

The first phase includes three new production wells in the southern part of the field tied into the Skarv FPSO with production planned to commence in late 2020. The second phase continues to be worked up and will target the northern part of the field - it is also planned to be tied into the Skarv FPSO with an estimated startup of 2023. The full field development targets 275mmboe.

Partners in Ærfugl are AkerBP (23.8% operator), Statoil (36.2%), DEA (28.1%) and PGNiG (11.9%).
Partners in Snadd Outer are: AkerBP (30% operator), Statoil (30%), DEA (25%) and PGNiG (15%).


Skogul (formerly Storklakken)
Skogul is located 30km north of Alvheim FPSO, and will be developed as a subsea tieback to Alvheim via Vilje. Recoverable reserves are estimated at 10mmboe. The Skogul production well is the 35th well in the Alvheim area and represents the partners' efforts in extending life and recovery in the area. Production is planned for Q1 2020.

Field partners are AkerBP (65% operator) and PGNiG (35%).

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Kosmos dry well at Lamantin

Lamantin-1 on Block C-12 offshore Mauritaniawas was drilled to a TD of 5,150m and designed to evaluate a previously untested structure. The logs and samples collected suggests the reservoir objective was water bearing with small amounts of hydrocarbons. The well will now be plugged and abandoned.

Kosmos will drill the Requin Tigre prospect next and is targeting 60tcf. The well is epected to take around 60 days.

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In AWE

China Energy Reserve and Chemical Group (“CERCG”) has returned with a second bid for AWE at A$0.73/share, valuing the company at A$463 million. This follows the withdrawal of the earlier offer at A$0.71/share on 4^th December.

On 30^th November, CERCG put out a takeover offer for AWE at A$0.71/share contingent on due diligence, approval by the regulatory authorities and the CERBG board. The offer was at a 30% premium to the share price was deemed insufficient by AWE to grant access for due diligence. The bid was subsequently withdrawn on 4^th December.

CERCG remains fiercely private with limited information in the public domain. It is reported to have deep pockets with material property investments in Hong Kong to the tune of billions. It is also understood that some of the directors are also on the board of China New Energy Mining Limited, which is the JV partner to Sino Gas on upstream gas developments in China.

On 8^th December, CERCG re-launched an offer at A$0.73/share – marginally better but places limited value on the vast contingent resource base of the company with potential upgrade at Waitsia. The approach from CERCG is the third bid in four years. The Lone Star bid at A$0.80/share (A$421 million) in 2016 and Senex scrip/cash bid in 2013 (at A$672 million) were both rejected.

This bid demonstrates continued Chinese interest in pursuing overseas acquisitions, and follows GeoJade’s venture into the international E&P arena with the acquisition of Bankers Petroleum in 2016. However the Chinese state oil companies remain on the sidelines having been burned by poorly timed acquisitions in the past decade, and it is the smaller private Chinese E&Ps and investors that are coming to the foreground.

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Canacol: Sabanas export flowline comes online

Canacol has announced that the Sabanas gas flowline is now connected. It is in the final stage of testing and gas transportation is scheduled to commence on 5^th December. The flowline has a capacity of 40mmcf/d which is expected to be reached in mid-January following completion of a second compression station - initial gas throughout is expected to be 20mmcfd. Gas will be routed from the Jobo processing facility to the Promigas export line at Bremen with the gas to be sold to consumers at Cartagena. Upon reaching the full 40mmcf/d capacity, Canacol's total gas offtake capacity will increase to 130mmcf/d.

Canacol also added that gas sales for October and November averaged 84.1mmcf/d and oil sales (including Ecuador) of 3,025 bbl/d. In December 2018, the company expects gas production capacity to increase to 230mmcf/d following the completion of the second expansion of the Promigas pipeline from Jobo to Cartagena and Barranquilla.

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Breathing new life into Tyra

The Danish Underground Consortium ("DUC") has approved an investment of DKK21 billion (USD3.4 billion) for the full redevelopment of the Tyra field.

DUC members are Total/Mærsk (31.2 %), Shell (36.8 %), Chevron (12 %) and Nordsøfonden (20 %). The development will ensure continued production from Denmark's largest field for years to come and will also rejuvenate important Danish offshore infrastructure. About 80% of the investment will be for modification of existing and construction of new facilities, with the remainder for decommissioning and removal.

The Mærsk press release noted:
"Tyra is the centre of Denmark’s national energy infrastructure, processing 90% of the nation’s gas production.

Through new development projects and third party tie-ins, the redevelopment of Tyra can be a catalyst for extending the life of the Danish North Sea – not just for Maersk Oil and the DUC, but also for Denmark."

"The new infrastructure can enable operators to pursue new gas projects in the northern part of the North Sea, where the most recent development, Tyra Southeast, delivered first gas in 2015 and is producing above expectations."

"The redeveloped Tyra is expected to deliver approximately 60.000 barrels of oil equivalent per day at peak, and it is estimated that the redevelopment can enable the production of more than 200 million barrels of oil equivalent. Approximately 2/3 of the production is expected to be gas and 1/3 to be oil."

The redevelopment has received government approval and will commence in 2019 with the field being shut-in between November 2019 and Summer 2022 for the works to take place.

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