CNOOC confirms that it will not pre-empt the sale of Tullow’s assets in Uganda to Total

On 23 April 2020, Tullow announced that it had agreed the sale of its assets in Uganda to Total and that CNOOC had rights of pre-emption to acquire 50% of these assets on the same terms and conditions as Total. CNOOC has now informed Tullow and Total that it has elected not to exercise its pre-emption rights. Accordingly, there are no changes to the previously announced transaction or timeline and Tullow continues to expect the transaction to complete in the second half of 2020. 

The transaction remains subject to a number of conditions, including approval by Tullow’s shareholders, customary government and other approvals and the execution of a binding tax agreement with the Government of Uganda and the Uganda Revenue Authority that reflects the agreed tax principles previously announced.  Tullow will now look to progress the tax agreement following CNOOC’s decision not to pre-empt. 

Source: https://www.tullowoil.com/media/press-releases/cnooc-elects-not-pre-empt-sale-assets-uganda/

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Hurricane receives extension from OGA for Lincoln commitment well at Greater Warwick Area

Hurricane Energy, the UK based oil and gas company focused on hydrocarbon resources in naturally fractured basement reservoirs, has provided an update in relation to planned activities on the Lincoln subarea of Licence P1368, part of the Greater Warwick Area ('GWA').

In light of the COVID-19 pandemic, Hurricane has requested extensions to certain licence commitments pertaining to Lincoln.

The Oil and Gas Authority has responded positively to these requests, extending the deadline for commencement of the GWA joint venture’s commitment well on Lincoln to 30 June 2022 and extending the deadline for plugging and abandoning well 205/26b-14 (Lincoln Crestal) to 30 June 2021.


Dr Robert Trice, Chief Executive of Hurricane, commented:
'We would like to thank the Oil and Gas Authority for their flexibility regarding the timing of activities planned at Lincoln during these challenging times.'

Greater Warwick Area

The Greater Warwick Area comprises licences P2294 (Blocks 204/30b & 205/26d) and P1368 South (Blocks 205/26b, 204/30b & 205/26d) is being appraised/developed through a joint venture between Hurricane energy (50%) and Spirit Energy (50%). The joint venture believes that the Greater Warwick Area (GWA) is a single hydrocarbon accumulation comprising the Lincoln discovery and the yet to be drilled Warwick prospect. The joint venture undertook a three well drilling program on the GWA during 2019 and is currently evaluating the results.

Source: https://www.hurricaneenergy.com/application/files/4915/9052/6429/20200526_-_HUR_RNS_-_Lincoln_Deferments_vF.pdf

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Hurricane Lancaster shuts-in production

On 22^nd May 2020, Hurricane announced that it would be shutting in the 205/21a-7Z well at Lancaster. This follows an attempt to increase production at the well to test the viability of reaching 20,000bopd across both wells on the field.

However this attempt had led to unstable production at 205/21a-7Z caused by interference between the existing two wells. Production will now continue at 205/21a-6 only and current production is at 10,300bopd.

Hurricane will be discarding its production target of 18,000bopd for 2021 and has suspended putting out new guidance.

This is disappointing news for those who had placed bets on the risky fractured basement reservoir proposition of the company and now facing another setback.

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Neptune Energy announces completion of seismic survey offshore Egypt

Neptune Energy has announced the successful completion of an ocean bottom nodes (OBN) multiclient survey in the North West El Amal block, offshore Egypt, delivering promising results for further analysis.

The project, prefunded by Neptune, was carried out by WesternGeco, the seismic and geophysical data solutions division of Schlumberger, under a contract with the Egyptian General Petroleum Corporation (EGPC), sponsored by the Egyptian Ministry for Petroleum and Mineral Resources. WesternGeco acquired the survey using third-party vessels.

The survey employed innovative OBN technology to overcome the challenge of acquiring improved imaging in the complex salt geometries of the Gulf of Suez. It was the first ever OBN seismic survey to be conducted in Egypt and the most detailed survey of the block since the first acquisition in 1988, providing an in-depth data set for processing, image analysis, and planning for potential exploratory wells in the future.

The North West El Amal offshore concession covers 365 km2 and is located in the central part of the Gulf of Suez, approximately 42 km south of Ras Gharib and 105 km north of Hurghada. Neptune was awarded the exploration licence in February last year, including the acquisition of 100 km2 of 3D seismic data.

Egypt Managing Director, Gamal Kassem said: “Egypt is important for Neptune and we are pleased to build on our strong relationships with the Ministry of Petroleum and Egyptian General Petroleum Corporation.

“The safe and successful completion of the seismic acquisition is an important achievement and is testament to the careful planning and professional execution by Neptune, EGPC and WesternGeco.”
The project involved placing large numbers of autonomous sensors on the seabed to acquire seismic data, then retrieving them for analysis. The process acquires more detailed data than standard technologies and is less sensitive to weather conditions which can impact traditional seismic survey vessels.

Neptune’s VP Exploration & Development, Gro Haatvedt added: “It’s very exciting to have been involved in the OBN seismic survey, the first time the technology has been deployed in Egyptian waters. Given the geographically-diverse nature of our global portfolio, Neptune is accustomed to working with innovative digital and subsurface technologies to tackle a variety of geological challenges.

“Obtaining subsalt imaging is particularly tough and the OBN technology was well-suited for this purpose. The next step is to analyse the data which has greatly improved our understanding of the block and will support our future plans including potential exploratory wells.”

Source: https://www.neptuneenergy.com/media/press-releases/year/2020/neptune-energy-completes-seismic-survey-offshore-egypt


About North West El Amal
Operated offshore concession in the central part of the Gulf of Suez

Block 4 - North West El Amal Offshore Concession

Status:
Neptune will acquire 100 km2 of 3D seismic data and drill one exploration well in the first phase, with two further wells planned in phase two.

North West El Amal facts:
Neptune was awarded its first operated concession in Egypt in 2019 and signed the concession agreement in 2020 with Minister of Petroleum Tarek El-Molla
The concession covers 365 km2 and is located in the central part of the Gulf of Suez
The area is 42 km south of Ras Gharib and 105 km north of Hurghada

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Oil giants posturing

Since the collapse of the OPEC+ meetings and in the wake of seismic demand destruction from COVID-19, both Saudi Arabia and Russia have been in a battle of who will blink first with commitments to increase production in the hopes of forcing the other back to the table to recommence production cut discussions. However as of today, there has been no face saving solution for either to MBS or Putin to back down and even Trump's calls to OPEC/Russia to (ironically) help lift oil prices have been ignored.

Despite the strong stance and hard talk by MBS and Putin, neither Saudi or Russia have actually significantly ramped up oil production to date. State-controlled oil companies in the two countries have reportedly hesitated before ramping up production in a show of careful navigation to avoid sending the entire oil & gas industry into oblivion in the potential absence of a winner-takes-all outcome which is becoming more and more apparent.

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Shell acts to reinforce business resilience and financial strength

Shell acts to reinforce business resilience and financial strength

23 March 2020

Press release as follows:

As the COVID-19 virus spreads across the world - seriously impacting people’s health, our way of life and global markets - Shell is putting the safety and health of our people and customers first, along with the safe operations of all our businesses.

At the same time, we are taking decisive action to reinforce the financial strength and resilience of our business so that we are well-positioned for the eventual economic recovery.

“As well as protecting our staff and customers in this difficult time, we are also taking immediate steps to ensure the financial strength and resilience of our business,” said Ben van Beurden, Chief Executive Officer of Royal Dutch Shell. “The combination of steeply falling oil demand and rapidly increasing supply may be unique, but Shell has weathered market volatility many times in the past.”

“In these very tough conditions, I am very proud of our staff and contractors across the world for maintaining their focus on safe and reliable operations while also ensuring their own health and welfare and that of their families, communities and our customers.”

In order to deliver sustainable cash flow generation, Shell is actively managing all our operational and financial levers – from focusing on maintaining safe and reliable operations each day to reducing capital spend and operating expenses.

Today, we are announcing that we have embarked on a series of operational and financial initiatives that are expected to result in:

• reduction of underlying operating costs by $3-4 billion per annum over the next 12 months compared to 2019 levels; 
• reduction of cash capital expenditure to $20 billion or below for 2020 from a planned level of around $25 billion; and 
• material reductions in working capital. 

Together, these initiatives are expected to contribute $8 - 9 billion of free cash flow on a pre-tax basis. Shell is still committed to its divestment programme of more than $10 billion of assets in 2019-20 but timing depends on market conditions.

The Board of Royal Dutch Shell has decided not to continue with the next tranche of the share buyback programme following the completion of the current share buyback tranche.

We will continue to review the dynamically evolving business environment and are prepared to take further strategic decisions and consider changes to the overall financial framework as necessary.

In the current environment, Shell’s financial resilience is fundamental to continued investment in our strategic priorities. Shell seeks to maintain strong financial credit metrics and ensure it has a robust balance sheet to manage volatility. Shell’s liquidity remains strong, with around $20 billion in cash and cash equivalents, $10 billion of undrawn credit lines under our revolving credit facility and access to our extensive commercial paper programmes.

Read about Shell’s global response to COVID-19 at https://www.shell.com/covid19.html

Shell will publish its next quarterly update note on 31 March 2020 and release its Q1 2020 results on 30 April 2020.

Notes to editor

• Divestments of around $5 billion of assets were completed in 2019 
• Current share buyback tranche refers to the $1 billion share buybacks announced on 30 January 2020 
• Shell is rated AA- with negative outlook by S&P and Aa2 with stable outlook by Moody’s 

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COVID-19 North Sea Recovery by end 2020

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