SDX makes heavy oil discovery at West Gharib in Egypt

SDX has made a heavy oil discovery on the West Ghraib licence at the Rabul-5 well.

The partners had implemented a waterflood programme in 2017 on the block and commenced an exploration and appraisal programme. Rabul-1 and -2 were drilled last year resulting in two discoveries and the current Rubul-5 well is a continuation of the delineation programme. Approval for develeopment locations at Meseda will be sought in 2018.

SDX holds 50% interest in the block, with Dublin International Petroleum holding the remaining operated 50% interest.

Press release below:

SDX Energy Inc., the North Africa focused oil and gas company, is pleased to announce that
an oil discovery has been made at its Rabul 5 Well in the West Gharib Concession in Egypt (SDX 50% Working Interest & Joint Operator).

The well was drilled to 5,280 feet total depth and encountered approximately 151 feet of net heavy oil pay across the Yusr and Bakr formations, with an average porosity of 18%. Further evaluation of the discovery is ongoing, after which the Company expects the well to be completed as a producer and connected to the central processing facilities at Meseda.

Following completion of the Rabul 5 well the Company will move on to the Rabul 4 location, the second of two appraisal wells planned for the Rabul feature this year.

Paul Welch, President and CEO of SDX, commented:
"We are pleased to continue our recent run of drilling success with this oil discovery at Rabul 5. This well encountered the thickest section of pay sands seen in the Rabul area to date, demonstrating the significant oil potential contained within the licence. We have further drilling activity planned for the concession over the coming months and we firmly believe that these activities will enable us to increase output from the licence and achieve our ambitious production plans for 2018.”

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Flight ban into Kurdistan lifted

Kurdistan operators can begin to ramp up operations again following the re-opening of the airport. As reported previously, the closure had caused logistical problems for the operators.

Reuters reported yesterday that Iraq has lifted the ban on international flights to the semi-autonomous Kurdistan Region's airports. Prime Minister Haider al-Abadi said that Kurdistan's regional airports will be under the command of the Federal Ministry of the Interior. The ban on international flights was part of sanctions imposed on Kurdistan after September’s Independence referendum. In recent months the oil companies and service providers have reined in activity, and gone overland via Turkey when required.

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Eni enters the Emirates

Eni has made its first move into the Emirates with entry into various fields in Abu Dhabi. It has paid ADNOC USD875 million to acquire a 40-year licence on:

• 5% in Lower Zakum offshore oil field
• 10% in Umm, Shaif and Nasr offshore oil, condensate and gas fields

The fields require further investment with combined gross production from the fields targeting 910mbopd. Once at plateau, the fields will contribute material production and generate significant cash flow.

Eni press release below

Eni signed today in Abu Dhabi two Concession Agreements for the acquisition of a 5% stake in the Lower Zakum offshore oil field and of a 10% stake in the oil, condensate and gas offshore fields of Umm Shaif and Nasr, for a total participation fee of about 875 million US dollar and a duration of 40 years.

The signing ceremony was attended by His Highness Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, and Deputy Supreme Commander of the United Arab Emirates Armed Forces, the Italian Prime Minister, Paolo Gentiloni, His Excellency Dr Sultan Ahmed Al Jaber, ADNOC Group Chief Executive Officer, and Eni’s Chief Executive Officer, Claudio Descalzi.

The agreements represent a strategic move for Eni gaining access to a Country with hydrocarbons reserves among the largest in the world.

Lower Zakum is located about 65 kilometers off the coast of Abu Dhabi. The discovery dates back to 1963 and production began in 1967. It has a target production of 450,000 barrels of oil per day. Umm Shaif and Nasr are located about 135 kilometers from the coast of Abu Dhabi and have a target production of 460,000 barrels of oil per day.

Eni's CEO Claudio Descalzi commented: «I'm very pleased about this agreement creating a larger presence for Eni in Middle East, in line with our expansion strategy, and creating a strong alliance with ADNOC and Abu Dhabi. The stakes in the two concessions give access to giant fields with huge potential and Eni is willing to contribute its best technology to maximize the future production».

H.E. Dr Al Jaber said: «These agreements underline the international market’s confidence in ADNOC’s long-term growth plans and the UAE’s stable and reliable investment environment. They also broaden and diversify our partnership base, while contributing experience, technology, capital and market access.

“Our partnership with Eni, and other concession partners, will enable us to accelerate our growth, increase revenue and improve integration across the upstream value chain, as part of our ongoing transformation and build on the foundations that have been laid to deliver a more profitable upstream business. With these agreements ADNOC continues to leverage its 46-year legacy of successful energy partnerships, in support of its 2030 strategy”.

In both concessions, ADNOC owns a 60% stake. The operator is ADNOC Offshore.

Eni press release: https://www.eni.com/en_IT/media/2018/03/eni-establishes-a-long-term-presence-in-uae-acquiring-a-stake-in-two-offshore-producing-concessions?lnkfrm=serp

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All’s well in western Kurdistan

The western part of Kurdistan appears to be holding up following the referendum last autumn. Although there is much to do to reconcile the fragile relationship between Federal Iraq and the Kurdistan region, things for now appear to have stabilised – however upcoming elections in both is limiting any meaningful progress with political candidates not willing to make any bold reconciliatory moves to avoid alienating voters.

The operators in western Kurdistan continue their business. They are getting paid by the KRG although the ability to maintain payments given loss of Kirkuk revenues, which has been reclaimed by Federal Iraq, remains in question. Exports through the Fishkabour-Ceyhan pipeline has not been interrupted despite threats last summer by the Turkish to halt exports through the pipeline if the referendum went ahead – that threat has not been followed through by action luckily for Kurdistan where oil exports remains its financial lifeline.

Based on our discussions with operators, the key constraint to operations is staff and supplies. With the regional airport closed, it has been difficult to get the right manpower and supplies to the oil fields. Transportation is currently from Turkey or from Baghdad. 

Sarsang (HKN 37% operator, KRG 25%, Marathon 20%, Total/Maersk 18%)

Total has taken over Maersk’s stake in the light oil field following the acquisition of Maersk; it may consider divesting the interest given lack of obvious synergies with the wider global portfolio and presence in Federal Iraq. At the end of last year, the field was producing at 15mbbl/d and will be continuing to ramp-up this year potentially reaching 30mbbl/d by year end.

Atrush (TAQA 39.9% operator, Shamaran 20.1%, Marathon 15%, KRG 25%)

First production was achieved in July 2017 and production has ramped up to c.26mbopd. The Phase I facilities are complete with five producers drilled and well capacity of over 40mbopd, although production is currently constrained by facilities at 30mbopd. 2P of 103mmboe and 2C of 304mmboe at the end of 2017 – further conversion of resources into reserves as more wells are drilled and further phases of the development are defined. 

The export pipeline from Atrush to the KRG pipeline is operational and the Atrush oil sales agreement was renewed in February 2018 with crude selling at Brent less USD15.73/bbl including quality discount and transportation costs.

With further appraisal work, debottlenecking and expansion of the development, production could reach 100mbopd.

Source: Shamaran February 2018 investor presentation

Shaikan (Gulf Keystone 58% operator, KRG 27.5%, MOL 14.5%)

Production in 2018 is expected to be 27-32mbopd. Subject to continued payments, Gulf Keystone would look to invest in additional wells and capacity this year to take production capacity up to 55mbopd.

In January 2018, Gulf Keystone signed a new oil sales agreement with the KRG at a price of Brent less USD22/bbl including quality discount and transportation costs. Shaikan crude is largely trucked to Fishkabour for injection into the export pipeline to Ceyhan. Shaikan should begin exporting via the Atrush tie-in pipeline shortly which will reduce trucking requirements and reduce netbacks.

Ain Sifni (Hunt Oil 80% operator, KRG 20%)

Production continues to hover around 10mbbl/d and the operator continues to progress the development which could see production grow to 30mbbl/d. Crude is currently trucked to Fishkabour for injection into the export pipeline to Ceyhan. As production grows, Ain Sifni production could also tie into the Atrush export line.

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Mubadala enters Zohr - acquires 10% from Eni

Mubadala has agreed to acquire a 10% interest in Zohr from USD934 million. Mubadala will acquire an interest in the Shorouk concession which contains the Zohr field. The super giant field came onstream in December 2017, 28 months after its discovery. The field is currently producing 400mmcfpd and planned to reach plateau by the end of 2019.

For Mubadala, this adds a world class asset with long term cash flows into its investment portfolio. Musabbeh Al Kaabi, Chief Executive Officer of Petroleum & Petrochemicals, Mubadala Investment Company, and Chairman of Mubadala Petroleum said: “This is an important and attractive investment for Mubadala, adding a world-class asset to our portfolio with long-term cash flows. We are joining a strong partnership with Eni as operator, who have delivered the project in record time and with the full support of the Egyptian authorities.”

For Eni, the deal is consistent with its strategy of monetising development and producing assets to recycle cash flows for exploration. It also reduces Eni’s portfolio weighting more towards OECD, a long term shift that the company continues to pursue. Claudio Descalzi, Chief Executive Office of Eni, said: “We are pleased to be working with Mubadala and welcome them into the partnership for the Shorouk concession. This represents a further signal about the strength and quality of this world class asset developed by Eni”.

The deal follows Eni’s farm-out of Zohr to BP and Rosneft in November and December 2016 prior to development spending. At the time, BP acquired 10% for USD525 million and 30% to Rosneft for USD1.125 billion. This compares with Mubadala’s current buy-in price of USD934 million for 10%.

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Tamar Petroleum to raise bonds to finance acquisition of Tamar from Noble

As reported previously, Tamar Petroleum is acquiring a 7.5% stake in the Tamar field from Noble Energy for USD800 million. The consideration will be paid USD560 million in cash with the remainder in Tamar Petroleum shares.

To help finance the transaction, Tamar Petroleum is planning to raise USD 625million (ILS 2.178bn) through the sale of bonds, Ha'aretz. reported. The net proceeds are expected to be c.USD605 million, the excess would be put in a special fund for a potential bond buyback, or early repayment.

Tamar Petroleum's holding in the field will increase to 16.75% following the deal, whereas Noble will be left with a 25% stake. This deal builds on Tamar's acqusition of 9.25% in the field from Delek Group for USD980 million in 2017.

Tamar Petroleum was a wholly owned subsidiary of Delek Drilling that was established to acquire the initial 9.25% stake in Tamar from Delek. The subsidiary was listed on the Tel Aviv Stock Exchange in 2017, raising USD330 million as part of the IPO. At the same time, it also raised USD650 million on the bond markets to fund the acquisition.

The move by Delek Drilling was the first in a series of steps to sell its entire 31.25% stake in the Tamar field by 2021 as mandated by the government due to competition concerns.

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Venture Global doubles LNG supply contract with Shell on Calcasieu Pass

On 6^th March, Venture Global announced that it had agreed to double its gas sales with Shell North America LNG from 1mtpa to 2mtpa under an amendment to the earlier gas sales agreement for LNG from Calcasieu Pass.

This brings the total committed capacity to 3mtpa with Edison having agreed 1mtpa in September 2017. The sale contracts are for 20 years and under FOB terms. The counterparties to date provide validation of the attractiveness of the project being one of the lower cost, mid-scale liquefaction projects and shows confidence in it going ahead and being able to deliver LNG in a reasonable timescale.

The Calcasieu Pass project is for 10mtpa with easy access to the sea and more than a mile of deep water frontage. It is waiting for non-FTA export approval later in 2018 following which it will look to take FID dependent on securing of further gas sales contracts. Venture Global sees first commercial operations at the end of 2021.

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