Energean targets Karish North

Energean is in the middle of drilling the Karish North prospect with results expected at the end of April 2019. The prospect is located c.5.4km from the Karish FPSO and is targeting 1.4tcfe. Assuming success and a discovery, Energean believes it would convert into 0.4bcm/y.

The FPSO is designed to handle 8bcm/y and Energean has so far secured 4.2bcm/y of offtake. It is expecting to finalise another 1.1bcm/y shortly, bringing contracted volumes up to 5.3bcm/y. Energean therefore has another 2.7bcm/y of capacity and Energean will look to contract this as soon as it is comfortable that it has more upstream gas volumes to underpin this.

Energean see lots of opportunity to sell more gas, led by the privatisation of Israeli power stations in the period 2019-22 which will open up 4.3bcm/y of demand.

Read More

Leveraging off Leverett

As part of the 30th Licensing Round, Zennor picked up Blocks 21/2d, 21/3c-d in licence P2350. The licence contains the Leverett discovery which was appraised by CNOOCNexen.

The discovery has had four wells and may or may not require further appraisal prior to development. The field could be tied back to Zennor's Finlaggan field and extend the plateau.

Leverett has been penetrated by:

• 21/2-2 - drilled in 1975 with the West Venture rig
• 21/2-4 - drilled in 1977 by Zapata with the Norjarl rig 
• 21/2a-11 - drilled in 2015 by Nexen with the Blackford Dolphin rig
• 21/3f-8 - drilled in 2013 by Nexen with the Transocean Prospect rig

Read More

CNOOC to drill in the West of Shetlands

CNOOC has contracted the Island Innovator rig from Island Drilling Company for the drilling of the Howick prospect in Block 206/21 in the West of Shetlands. CNOOC is 100% operator of the block

CNOOC also has Cragganmore discovery in Block 208/17A which is planned to be further appraised, potentially in 2019. CNOOC is operator of Cragganmore with 70% interest; INEOS is a 30% partner.

Read More

Understanding Mozambique's fiscal regime (Part I)

Government take across countries in East Africa are generally below the Sub Saharan Africa average of 62%. This reflects the relative infancy of the E&P industry in the region with high exploration risk and uncertainties on the path to commericialising discovered resources. A lower fiscal take is required to attract investment.

Mozambique’s government take lies in the middle of its East African neighbours - lower than Uganda where significant oil reserves have been proved up, and Tanzania where fiscal terms are less attractive. Mozambique's fiscal take is uncompetitive relative to Kenya and Ethiopia, which are considered to be important E&P players in due course.

It is also important to note that Mozambique's resources are gas and hence deemed significantly less attractive than oil. Such large scale gas discoveries are expensive to monetise but clearly LNG is becoming an increasing focus by global IOCs and there has been enough momentum over the years to fianlly get Mozambique LNG off the ground.

Mozambique operates a standard PSC regime with an R-factor based on cumulative income/cumulative costs.

Read More

Gran Tierra's Grand Tour (into Ecuador)

Gran Tierra has won three blocks in Ecuador covering c.140,000 acres in the highly prospective Oriente-Putumayo Basin: Charapa, Chanangue and Iguana. The blocks are contiguous with Gran Tierra’s Putumayo position in Colombia and allows the company to extend its Colombian success on the trend across the border.

Gran Tierra will have 100% interest and operatorship on each block in exchange for a 14 well, four year work programme – management plans to commence the programme in 2020, to be fully funded from internal cash flow.  The contracts work on a sliding scale for contractor share of revenues, ranging from 87.5% at USD30/bbl to 40% at USD120/bbl.

The Charpara block sets Gran Tierra off to a good start with an existing field and historical production from the B-Limestone. As Gran Tierra matures its new acreage, there is scope to construct its own gathering infrastructure and use the export infrastructure in Ecuador. In due course, this could also be an export route for its Colombian production in the same way that Amerisur has built its own OBA pipeline from its Platanillo block to Ecuador (see Bienvenido Victor Hugo and Putumayo smart crude marketing).

The other side of the border into Ecuador has always been an exciting play. Whilst geologically the same trend, the Colombian side of the border has been underexplored due to historical above ground conflict and security issues. In contrast, Ecuador has been highly successful with many fields where nearly 6bnbbl of oil has already been produced.

Read More

Fighting the Kraken

Cairn has announced a reserves downgrade on Kraken by 6.8mmboe (net) or 19% to reflect ongoing production issues. The field has been hit by a myriad of problems since start-up in 2017 and its failure to be farmed-down by operator EnQuest in 2018 highlights the technical concerns on the field.

The field's output has been hit by poor FPSO uptime driven by system outages as well as higher water-cut than originally expected. There will be a planned shutdown later in 2019 to make improvements to the FPSO uptime.

Operator EnQuest maintains the level of 2P reserves and does not expect to recognise an impairment as it finalises its year end 2018 accounts.

The partners in Kraken are EnQuest (70.5% operator) and Cairn (29.5%).

Read More

ExxonMobil scores big this week

ExxonMobil has made two significant announcements this week: the sanction of the USD10+ billion Golden Pass LNG project and further exploration success in Guyana.

Golden Pass LNG
On Tuesday, ExxonMobil and Qatar Petroleum sanctioned the Golden Pass LNG project in Texas. It will have a cost of USD10+ billion and deliver capacity of 16mtpa from 2024. Golden Pass was originally a LNG import facility but will be converted over the next five years.

The JV between ExxonMobil and Qatar Petroleum cements the relationship between the two companies and builds upon the existing co-operation in the Qatargas LNG projects in Qatar. The sanctioning of this projects follows Qatar’s decision to pull out of OPEC from January 2019 as it said it would focus its efforts on gas. This may also have been necessary as US is considering cartel legislation which would have impacted Qatar’s ability to participate in US projects.

Guyana success
ExxonMobil announced on Wednesday the successful 11th and 12th discoveries offshore Guyana. This follows the 10th discovery, Pluma-1, made in December 2018.

Tilapia-1 encountered 93m of high quality reservoir  (oil) and lies in the Turbot Area of the Stabroek Block, which also contains the Turbot, Longtail and Pluma discoveries. The next well in plan is the Yellowtail-1 located 10km to the west.

Haimara-1 encountered 63m of high quality reservoir (gas/condensate) and could potentially open up a new area.

These discoveries will add to the recently resource estimate of 5+bnboe (from already increased from 4+bnboe following Pluma-1). With a further 15+ prospects to drill, the resource estimate could increase materially.

Phase 1 (Liza Phase 1) of the development is underway, and will include 17 wells connected to a FPSO with 120mbopd production expected in early-2020. Liza Phase 2 is planned to be sanctioned soon with a 220mbopd FPSO. Phase 3 (Payara) sanction is also expected in 2019 with startup in 2023. ExxonMobil sees at least five FPSOs on the Stabroek Block with production of >750mbopd by 2025.

Read More