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.

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Anadarko signs SPAs for Mozambique LNG

Anadarko has signed three gas Sale and Purchase Agreements (“SPAs”) with Tokyo Gas/Centrica (2.6mtpa), Shell (2mtpa) and CNOOC (1.5mtpa) for its Mozambique LNG Area 1 development. This total 6.1mtpa of the planned 12.88mtpa ahead of FID expected in mid-2019. The LNG development will challenge upcoming projects given its fortunate location in between the Asian and European markets and will compete with Australian, Middle Eastern and North American suppliers.

These SPAs are conversions of existing Heads to Terms and there could be more SPA announcements on the way. Anadarko has made clear that it expects to debt finance c.USD12 billion of the USD20 billion Phase 1 development and these SPAs will help to support that financing.

The owners of Mozambique LNG Area 1 are:

Separately, the Area 4 LNG JV between ExxonMobil and Eni is also on track for sanctioning later in 2019.

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Cluff extends farm-out exclusivity in Southern North Sea to Major

Cluff Natural Resources press release
Further to its announcement on 28 November 2018, Cluff Natural Resources Plc, the AIM quoted natural resources investing company with a high impact exploration and appraisal portfolio focused on the Southern North Sea gas basin, provides an update regarding its exclusivity agreement with a major oil and gas company for its Southern North Sea Gas licence P2252.

As previously announced, the Company signed an exclusivity agreement (the "Agreement") on Licence P2252 with a major international oil and gas company (the "Counterparty"), whereby exclusivity was granted to the Counterparty subject to a definitive farm out agreement being entered into by 31 January 2019 (the "Exclusivity Period").

The Company announces that discussions with the Counterparty regarding a definitive farm out agreement are at an advanced stage, though have not yet concluded.  As a result, the Exclusivity Period has been extended by one week. Therefore, exclusivity continues to be granted to the Counterparty, subject to a definitive farm out agreement being entered into by 7 February 2019

Source: https://www.cluffnaturalresources.com/wp-content/uploads/2019/02/Extension-to-exclusivity1.2.19.pdf

Cluff Natural Resources licence map

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UK North Sea gets shot in the arm with Glengorm

CNOOC, Total and Edison have made one of the biggest finds in the UK North Sea in recent years. The Glengorm discovery is estimated to contain recoverable resources of 250mmboe which is even bigger than Total’s recent success in the West of Shetlands at Glendronach which had 1tcf of gas (c.160mmboe). Glengorm sits on licence P2215 and in the vicinity of both the Culzean and Elgin & Franklin gas fields which could act as future hosts for Glengorm.

Glengorm is operated by CNOOC (50%) with Total (25%) and Edison (25%) as partners. The exploration well (22/21c-13) was spud on 26^th August 2018 with the Prospctor 5 jack-up rig targeting the Upper Jurrasic Fulmar and Heather formations. The HPHT prospect was challenging to drill but persistence has paid off. CNOOC tried to drill the prospect twice in 2017 but failed to do so following technical problems.

Maersk, Premier Oil and Centrica had relinquished the licence in which the field is contained back in 2014 when it was deemed too small and complex to commercialise. Glengorm has clearly exceeded all expectations with unrisked recoverable resources estimated at c.65mmboe back in 2014 (41mmbbl oil and 128bcf gas). The 2014 relinquishment report also highlights a number of prospects in the vicinity and CNOOC, Total and Edison have expectations of further prospectivity in the area for future growth.

Source: Maersk 2014 relinquishment report

Source: Maersk 2014 relinquishment report

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Premier success at Zama

Premier and operator Talos have announced the successful appraisal of Zama-2 offshore Mexico. This is the second well on the Zama field, following the initial discovery at Zama-1 in 2017, and reaffirms the massive 600mmbbl oil discovery.

The well penetrated 152m of net pay with a high net-to-gross of 73% (vs. Zama-1 of 63%). This suggests potential resource upside and could see resource estimates being upgraded as the appraisal campaign continues.

Zama-2 will now be sidetracked to penetrate the reservoir vertically to aid coring and testing. The upcoming Zama-3 well will appraise the southern portion of the accumulation. With good confidence on the underlying resources, the Zama partners should now be thinking ahead on development plans.

The Zama field is planned to be developed from a single drill centre with drilling from the platform. Three production platforms are envisaged, each with capacity of up to 100mbopd. Produced oil is planned to be transported via a pipeline to the Dos Bocas terminal located onshore, c.70km away from the field.

For Premier Oil, this development could overtake the Sea Lion development in the Falklands (another large resource optionality for the company), adding visibility to additional near-term production growth.

The Zama partners are: Talos (35% operator), Sierra Oil & Gas (40%), Premier Oil (25%).
Sierra Oil & Gas was recently acquired by DEA.

#Premier #Zama #Mexico #Block7 #Talos #Sierra #Wintershall #DEA

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Genel grows in Kurdistan

Genel is acquiring interests in the Chevron operated Sarta and Qara Dagh blocks.

Genel will acquire a 30% interest in Sarta and will pay 50% of the field development costs until a specific production target is reached; there will also be a production milestone contingent payment – total spend by Genel is estimated at USD60 million. Chevron will retain a 50% interest and the KRG holds the remaining 2% interest which is carried by the oil companies. Sarta currently has three wells with both Sarta-2 and Sarta-3 having flow tested at c.7,500bopd. The first phase of development will produce from these wells with initial export via trucking.

Qara Dagh is an appraisal licence and Genel will acquire a 40% operated interest through a carry. Chevron will retain 40% interest and the KRG holds the remaining 20% interest. The last well (Qara Dagh-1) was drilled in 2011 which showed complex geology. Genel plans to drill Qara Dagh-2 in 2020.

Genel is slowly rebuilding its profile following a series of disastrous downgrades in Kurdistan – this is now behind the company and it is receiving good cash flow from the Tawke production which it can now reinvest in Kurdistan.

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Saudi Arabia announces upgrade to oil and gas reserve base

The Ministry of Energy, Industry and Mineral Resources of Saudi Arabia has announced an upward revision to the Kingdom's proven oil and gas reserves, following an independent certification of oil and gas reserves in Saudi Aramco's concession area conducted by leading consultants DeGolyer and MacNaughton (D&M).

The Kingdom previously announced that oil and gas reserves as of 31 December 2017 were 266.3 billion barrels of oil and 307.9 trillion standard cubic feet of gas respectively. Of these, the estimated proven oil and gas reserves in Saudi Aramco's concession area were 260.9 billion barrels of oil and 302.3 trillion standard cubic feet of gas. Following the certification, Saudi Aramco's concession area oil reserves at year-end 2017 would have been 2.2 billion barrels higher or 263.1 billion barrels of oil and 319.5 trillion standard cubic feet of gas.

In addition to Saudi Aramco concession area reserves, the Kingdom also owns half of the oil reserves in the Partitioned Zone jointly owned by Saudi Arabia and the State of Kuwait. The Kingdom's share of the Partitioned Zone oil reserves (onshore and offshore combined) is 5.4 billion barrels and the corresponding gas reserves is 5.6 TCF.

So, including the D&M revision of oil reserves in the Saudi Aramco's concession area, the Kingdom's total proven oil and gas reserves as of year-end 2017 would have been about 268.5 billion barrels of oil and 325.1 trillion standard cubic feet of gas, respectively.

The Minister of Energy, Industry, and Mineral Resources, His Excellency Khalid Al-Falih, noted that this also highlighted three other important realities:

• That these vast reserves are also among the lowest cost in the world, backed by world-leading economies of scale.
• That the carbon intensity of Saudi Arabia’s oil and corresponding gas flaring are among the very lowest in the world, and he called on the industry to use this metric alongside profitability.
• And that it was a tribute to the importance the Kingdom places on integrity, the discipline and world-leading excellence of Saudi Aramco's operations and employees.

'This certification underscores why every barrel we produce is the most profitable in the world, and why we believe Saudi Aramco is the world’s most valuable company and indeed the world's most important,' His Excellency said.

Background:

The results of the D&M's evaluation have conclusively proved the integrity, robustness, and accuracy of the Kingdom's – and in particular Saudi Aramco's - internally-conducted estimates of its hydrocarbon reserves.

The Kingdom's previous evaluations of its hydrocarbon reserves as of the end of 2017, including Saudi Arabia's share of the Partitioned Zone (PZ), were around 266.3 billion barrels of oil (Saudi Aramco 260.9 billion barrels and 5.4 billion barrels in the PZ), and around 307.9 trillion standard cubic feet of natural gas.

It is common industry practice to focus the reserves audit on the major reservoirs in a company's portfolio. Accordingly, D&M evaluated 54 major oil reservoirs operated by Saudi Aramco, out of 368 in Saudi Aramco’s portfolio. These 54 reservoirs alone make up approx. 80% of the Saudi Aramco's reserves in the concession area 260.9 billion barrels oil reserves estimate. D&M's certification confirms that, as of December 31, 2017, these 54 reservoirs contained 213.1 billion barrels of proved oil reserves – conventionally known as '1P' – assessed on a full reserve life basis. This compares to a figure of 210.9 billion barrels of oil for the same reservoirs as estimated internally by Saudi Aramco. D&M's oil reserves certification being 1.0% higher (+2.2 billion barrels) than Saudi Aramco's.

In terms of gas certification, the Ministry noted that D&M evaluated gas reserves in 77 major reservoirs operated by Saudi Aramco, that alone make up approximately 60% of the Kingdom's 302.3 trillion standard cubic feet (tscf) gas reserves estimate. D&M's certification confirms that, as of December 31, 2017, these 77 reservoirs contained 204.9 tscf of proven gas. This certification is 9.2% higher (+ 17.2 tscf) than Saudi Aramco's internal estimate for the same reservoirs, which proves that the Kingdom adopts highly cautious methods in evaluating its oil and gas reserves.

As indicated above, D&M’s evaluation was limited to 'booked' oil and gas resources in the Saudi Aramco's concession area and does not cover other available hydrocarbon resources in the Kingdom, such as the significant unconventional gas reserves recently discovered but not yet 'booked' by Saudi Aramco or the Kingdom. Nor did the D&M cover the Kingdom's share of the reserves in the Saudi–Kuwaiti Partitioned Zone, which has both an onshore and offshore component. The onshore part is estimated by Saudi Arabian Chevron at 2,923 million barrels, while its share of gas reserves in that area is estimated at 877 billion standard cubic feet. In addition, the Kingdom’s share of oil reserves in the Offshore Partitioned Zone is estimated by Aramco Gulf Operations Company at 2,476 million barrels, while its share of gas reserves in the same area is estimated at 4,749 billion standard cubic feet. So, the Kingdom’s share of the total oil and gas reserves in the Partitioned Zone, onshore and offshore combined, is roughly 5.4 billion barrels and 5.6 trillion cubic feet of gas.

This independent evaluation further underscores the Kingdom's strong position and reputation for reliable oil production and supply. It also represents a strong validation of both the robustness and accuracy of Saudi Aramco's internal estimation techniques and processes, and provides in-depth insight into the unique size of the oil and gas reserves in Saudi Arabia.

'This independent third-party certification is in line with the Kingdom's Vision 2030, which promotes transparency, accuracy, and quality of all kinds of critical data. This reflects the continued direction and support provided to the Saudi petroleum industry by the Custodian of the Two Holy Mosques, King Salman bin Abdulaziz Al Saud; and HRH Crown Prince Mohammad bin Salman bin Abdulaziz,' His Excellency said.

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