Monday, May 16, 2011

Repsol’s Q1 2011 Production down 7.4% over the same period last year; Unrest in Libya and Maintenance work in the Caribbean are the key factors!


Repsol posted O&G production of 324,348 boepd, down 7.4% over Q1 2010 production of 350,000 boepd. This is mainly due to conflicts in Libya, moratorium in GoM production and maintenance turnarounds in Trinidad & Tobago. However, these factors were partially offset by higher output from Peru, driven by demand and the LNG plant, and by the new contract that came into force in Ecuador.

In Libya, Repsol produced 27,000 boepd for Q1 2011, over 43,000 boepd in Q1 2010. Production is completely interrupted from March 2011. Second, the negative impact of production moratorium in GoM. Repsol face a drop of 8,000 boepd versus Q1 2010. Third, maintenance turnarounds in Trinidad & Tobago meant that production was 11,000 barrels per day lower than last year.








Exploration Activities in the Quarter:

Repsol invested €302 million (US$ 426 million) in first quarter 2011. Of this, €252 million (US$ 355.6 million) were spent in Exploration and Production and 85% of this sum was in development projects.

The company currently drilling five exploratory wells; two in the Brazilian Santos 44 block, Itaborai and Tingua; one in Campos 33 block, Gavea; one in Bolivia, Sararenda; and one in the US onshore, Garden Island Bay 1. The company is forging ahead with the appraisal well drilling campaign in Peru with Kinteroni 3 and in Venezuela with Perla 5.

Repsol recently farm-in into 164 blocks at Alaska prolific North Slope. The blocks are close to existing producing fields and cover an area of 2,000 square kilometers.

Source: Derrick Petroleum Planned Exploration Wells Database

PARTIAL DIVESTMENT of YPF:
After the sale of a total 4.2% stake of YPF during the last quarter of 2010, Repsol in March carried out a public offering for 7.7% of that company’s stock and other sales totaling 3.83% of YPF.
In May 2011, Grupo Petersen informed Repsol of its decision to exercise its option to buy 10% of the capital of YPF almost a year in advance of the option’s February 2012 expiration.

Total enters Poland. Total acquires 49% interest in two shale gas concessions from ExxonMobil


Total reached an agreement with ExxonMobil to farm into the Chelm and Werbkowice exploration concessions with a 49% interest, subject to the approval of the Polish authorities. Under the terms of the agreement, ExxonMobil and Total will form a partnership operated by ExxonMobil, which retains a 51% interest. The entry into these concessions reflects Total’s commitment to expanding activities in unconventional gas, notably in Europe, a growth segment of the Group.

Awarded for a period of five years from March 2009 and December 2008 respectively, the Chelm and Werbkowice exploration concessions are located in the Lublin Basin in southeastern Poland and cover 1,162 square kilometres and 995 square kilometres. The work program for each concession comprises acquisition of seismic data, drilling of an exploratory well and a production test if drilling results are encouraging. To date ExxonMobil has already performed seismic acquisition works, as well as the drilling of an exploratory well on the Chelm concession currently being evaluated.


A quick view on ExxonMobil’s shale gas licences in Poland 

ConocoPhillips plans to sell Vietnam assets for $2-$2.5 billion.. Lot more parcels available as part of $5-$10 billion divestiture plan.

ConocoPhillips is planning to dispose of its holdings in the projects located in the South China Sea, said John McLemore, a company spokesman.
Conoco- Vietnam operations overview:
  • ConocoPhillips has a 23.3% interest in Block 15-1, and its activities are focused around three producing fields: Su Tu Den, Su Tu Den Northeast and Su Tu Vang; and two fields in development: Su Tu Trang and Su Tu Nau. First production on the Su Tu Den Northeast Field occurred in May 2010, averaging a net 4,000 barrels of oil per day and 4 million cubic feet per day of natural gas. Net production from the three producing fields averaged 18,000 barrels of oil per day in 2010.
  • ConocoPhillips has a 36% interest in the Rang Dong Field in Block 15-2. Net production in 2010 was 6,000 barrels per day of liquids and 12 million cubic feet per day of natural gas.
  • For transportation services, ConocoPhillips has a 16.3% interest in the Nam Con Son natural gas pipeline. This 244-mile transportation system links gas supplies from the Nam Con Son Basin to gas markets in southern Vietnam and has a capacity of 700 MMcf/d.


A value for the package
The assets put up for sale could be valued between $2-$2.5 billion, while the peers value the assets at about $1.5 billion. Rationale for the valuation is as follows-
  • Production of 26,000 boe/d is valued between ~$1.6-$1.8 billion ($60,000-$70,000/boe- based on the recent BP and TNK-BP deal in Vietnam with a premium factor applied);
  • A gas pipeline in general has lifetime of about 20 to 25 years. The Nam Con Son pipeline, which was put into service in 2002, is left with 9-16 years of service. Assuming the daily capacity to be approximately consistent at 700 MMcf/d, the 16.3% stake in the Nam Con Son pipeline is valued at ~$400-$700 million (at an average cost of $1,000/Mcf/d of gas pipeline capacity.)
NOTE: Average cost of $1,000/Mcf/d of gas pipeline capacity is sourced from the Midstream Database of Derrick Petroleum.


A brief look up at Conoco’s 2011-2012 divestiture program.
ConocoPhillips has planned for $5 billion to $10 billion in asset sales over 2011 and 2012 as it seeks cash to fund share buybacks and growth. ConocoPhillips sold about $7 billion in assets last year through a program announced in 2009 and intended in part to help reduce debt. The following table shows the divestitures of ConocoPhillips since 2010.


ConocoPhillips has now expanded the total sales target earlier this year to as much as $17 billion. “The company is marketing the assets in Vietnam as part of the divestiture program”, McLemore said in an e-mail yesterday. The following snapshot shows the exhaustive information collected by Derrick Petroleum on Conoco’s $5-$10 billion divestiture plan.

Angola Oil - South West Africa's Next Crown Jewel


INTRODUCTION
Angola is a huge country present on the south-west coast of Africa, bordering the South Atlantic Ocean, between Namibia and the Democratic Republic of the Congo. It was home to a 27 year civil war that is estimated to have cost the lives of up to 1.5 million people, and displaced a further 4 million. The war came to an end following the death of Jonas Savimbi, the leader of the National Union for the Total Independence of Angola (UNITA), in 2002. President Jose Eduardo Dos Santos, the leader of the Popular Movement for the Liberation of Angola (MPLA), the main opponent against Savimbi, consolidated his hold on power and despite promising to hold presidential elections in 2009, has since managed to pass legislation to hold elections in 2012.

Figure 1: Map location of Angola. Modified from Google Earth.

Oil and gas exploration started in the early 1900’s, but it wasn’t till 1955 that the first onshore commercial discovery was made at the Benfica field in the Kwanza basin. In 1966, the first offshore commercial discovery was made at the Limba field in the Lower Congo Basin. There was restricted exploration activity onshore due to the civil war that engulfed the country for a quarter century, and exploration efforts were more focused offshore. Deepwater exploration commenced in 1993, and in 1996 the first deepwater commercial discovery, the Girassol field, was made at the Lower Congo Basin, in Block 17, by a consortium led by Total. In 1999 exploration moved to the ultra deepwater and the first commercial ultra deepwater discovery, the Plutao field, was made in 2002 in the Lower Congo Basin.

GEOLOGICAL BACKGROUND
Angola has three main sedimentary basins; the Kwanza, Namibe and Congo basins. Although all three basins have the pre-requisites for hosting hydrocarbons, only the Congo and Kwanza basins have so far yielded them in commercial quantities. Most of the exploratory success has come from the northern portion of Angola, where it seems the geology has favoured the northern blocks. One noteworthy example is Block 0 that lies offshore the Cabinda province, to the immediate north of the Congo river. Chevron operates Block 0 which provides about 20% of Angola's crude oil production. The mighty Congo river deposited huge amounts of sediment in the area along with vegetative matter that eventually turned into oil over geological time, increasing oil concentrations in this area. The block is divided into Areas A and B and together they contain 21 fields whose total production in 2010 was 365,000 boepd. Exploration in the southern blocks ceased after non discoveries in blocks 9, 21, 22 and 25 located offshore of southern Luanda. However, geologists in Sonangol, the concession holder and national oil company of Angola, are keen to begin comprehensive surveys of blocks in the Namibe Basin, which they believe has untapped resources.
Figure 2: Sedimentary Basins of Angola. Source, Ministry of Petroleum, Angola.

RESERVES AND PRODUCTION
Angola is an oil-dependent state with oil production and its supporting activities contributing about 85% of GDP. Angola has maintained a high growth rate of ~8% over the last 8 years due in large part to oil exports. In 2009 Angola became the leading producer of crude oil in Africa, overtaking Nigeria which experienced extreme sectarian violence and attacks on oil infrastructure. However, at the beginning of 2010, based on EIA data, Nigeria had the highest reserves in Africa, at 37.2 bboe. According to the BP statistical review, Angola’s proved reserves at the end of 2009 were 13.5 bboe and production at the end of the same year was 1.7 mmboe/d. This was up from 0.7 mmboe/d in 1990. The oil minister of Angola has put the reserves as on Dec 2009 at 13.1 billion barrels. Exploration has mainly focused offshore due in a large part to the civil war that divided the country. However, the northern city of Soyo and the disputed Cabinda Province are also host to some proven oil reserves. Angola became a member of OPEC in 2007. According to the EIA, Angola produced 1.82 mmboepd making it the largest crude oil producer in Africa and placing it seventh among OPEC members. Angola has had increasing production capacity from earlier discovered fields coming online but despite this, Angola maintained output at approximately 200,000 bbl/d below capacity, as a response to OPEC’s most recent production allocation. In the first quarter of 2011, EIA estimated Angola supplied 1.7 mmboe/d, which again placed it second behind Nigeria at 2.13 mmboe/d in African crude supply.

Figure 3 – Opec production for Q1 2011. Source: EIA short term outlook, May 10, 2011. Graph, Derrick Petroleum Services.

EXPLORATION
Angola, home to the 3rd largest proved reserves in Africa after Libya and Nigeria, has had its fair share of exploration, mostly focused offshore and in the deep offshore. The turning-point in the history of oil exploration and production in Angola came about with the commercial discoveries in the deep waters of Block 17 and neighboring Blocks 14, 15 and 16. In 1996 when the reserves of Girassol were discovered in deep water on Block 17, Angola went from being a solid but average oil producing country to a hotspot in the global search for major oil reserves. Oil exploration and production in Angola mainly occurs in the offshore blocks, which are divided into 3 bands; Blocks 0 – 13 are shallow water blocks (Band A); Blocks 14 – 30 are deepwater blocks (Band B); and Blocks 31 – 40 consitute the ultra-deepwater blocks. Angola is also planning to throw up new blocks for exploration in 2011, after deliberation on the terms governing access to its highly prized pre-salt blocks. The pre-salt in Angola is thought widely to be analogues to the pre-salt in Brazils offshore basins which has had many substantial discoveries. Due to the fact that the South American and African continent were joined together in the geological past, many experts now believe that the pre-salt in Angola has potential to host huge reserves of hydrocarbons. In addition, the salt in Angola occurs both onshore and offshore, in contrast to the salt in Brazil which only occurs offshore.

Onshore exploration has been stymied due to the long civil war in the country. The Cabinda province was the site of most onshore exploratory efforts which were halted during the civil war.  At this time the only basin in operation is the Lower Congo, in the onshore area of the Congo River, also known as the Soyo area. However, Angola is now planning new improved policies to tap into its onshore resources and to create a positive atmosphere for drilling onshore.

EXPLORATORY WELLS IN 2011
Unless stated otherwise all data below is from the Derrick Petroleum- Planned Exploration Wells Database. According to this database, updated daily, there are a number of wells planned to be drilled in 2011. 25 wells over 10 blocks are scheduled to be drilled, with most exploratory drilling occurring offshore. 16 of these wells are in the deep offshore with the rest in the shallow offshore. The operators in these blocks are BP, ENI, Sonangol, Vaalco Energy, Petrobras, Maersk Oil, Cobalt International, Chevron, Pluspetrol and Total.

Table 1: Table showing companies planning exploratory drilling in 2011 and beyond. The number of columns has been minimized to fit the table on the page. The actual database has many more parameters listed and recorded. Source, Derrick Petroleum- Planned Exploration Wells Database.

Block 15/06
Eni has a 35% working interest and is the Operator in Block 15/06, while Sonangol E&P is the Concessionaire. The other partners of the Contractor Group are Sonangol Pesquisa e Produção (15%), SSI Fifteen Limited (20%), Total (15%), Falcon Oil Holding Angola SA (5%), Petrobras International Braspetro B.V. (5%) and Statoil Angola Block 15/06 Award AS (5%). Six discoveries have been made in the block so far; Sangos, N'Goma, Cabaça Norte-1, Nzanza-1,Cinguvu-1 and Cabaça south east. There are no more exploration wells to be drilled as the consortium is now planning development of discoveries.

Angola LNG II Upstream
Angola LNG II is a joint venture composed of Sonagas (22.8%), Chevron (36.4%), Eni (13.6%), Total (13.6%) and BP (13.6%) that will evaluate existing gas discoveries and explore further potential in the Angolan offshore, with the objective of supporting the feasibility of a second LNG train. The consortium plans to carry out a 3D seismic survey and drill 1 exploration well on the Angola LNG II area in 2011.

Block 5
Interoil is a 40% participant in Block 5, where Vaalco Energy Inc. is operator with an equal interest. Sonangol P&P (national oil company of the Republic of Angola) is also a partner with an interest of 20%. Block 5 is 5708 sq kms and is located in the Kwanza basin in the northern waters, offshore Angola. 95% of the block has a water depth of less then 200 mts. Three prospects, Kindele, Loengo and Jack have been mapped on the block. The gross mean unrisked resource potentials for these prospects are estimated to be 41, 93 and 41 mmboe respectively. The operator plans to drill atleast two prospects out of the three in 2011 and the third one in 2012.

Block 6
In Block 6 Interoil is participating with 20%, where Petrobras is operator with an interest of 40% and Sonangol, Initial Oil & Gas and Falcon Oil are partners with a total interest of 40%. Block 6 covers an area of 4930 sq km and is located in the northern area of Kwanza Basin offshore Angola. The water depth ranges from 50 to 500 m. 8 wells were drilled by the previous owners, which resulted in 2 heavy oil discoveries. The largest of these discoveries is the Cegonha heavy oil field. Petrobras is planning to drill 11 wells on its 3 operated blocks in Angola. Assuming 8 wells drilled on the other 2 blocks, 3 wells are expected to be drilled in this block in 2011.

Blocks 18/06 and Block 26.
The consortium plans to drill 8 wells on these blocks in Angola in 2011. The ownership structure of these two blocks is given below.

Figure 4: Ownership Structure for Block 18/06 and Block 26. Source Derrick Petroleum

Block 16
Maersk Oil operates the block with a 65% interest. Sonangol (20%) and Odebrecht (15%) are partners. Block 16 lies 100 km offshore Angola in water depths ranging from 200 m to 1500 m. Wildcat wells targeting the Omba and Caiundo prospects are scheduled to be drilled in 2011.

Blocks 9 & 21
Block 9 (4000 sq km) is located offshore Benguela Basin and in water depths that range between 50 to 1,000 meters. The block has oil potential of 400 MMBO (25-28 degree API). Prospects are scheduled to be drilled in late 2012. Block 21 (4,900 sq km) is located in the deep-water offshore south-central Kwanza Basin, some 200 Km southwest of Luanda. The water depth of the block is 300 to 1,600 m. Two prospects, Bicuar and Cameia, are scheduled to be drilled in 2011.

Block 0
Chevron operates this block with a 39.2% interest. Other partners are Sonangol (41%), Total (10%) and Agip (9.8%). The block is divided into Areas A and B. Together they contain 21 fields whose total production in 2010 was 365,000 barrels of liquids per day. According to Chevron two exploration wells are planned to be drilled on the block in 2011.

Block 8
Maersk Oil is the operator of the block with a 50% interest. The other partners are Svenska Petroleum (30%) and Sonangol (20%). Block 8 is situated along the early Cretaceous pre-salt lacustrine rift trend. It starts at the beach of the Kwanza and extends westwards, with water depth ranging from the very coastline to 600 metres. A well is scheduled to be drilled in 2011.

Block 23
Maersk Oil is the operator of the block with a 50% interest. The other partners are Svenska Petroleum (30%) and Sonangol (20%). Located in the deepwater Aptian salt basin trend, both pre- and post-salt petroleum systems have been identified. A well is planned to be drilled in 2011.

Block 17/06
Deep offshore Block 17, is operated by Total with a 40% interest and is Total’s principal asset in Angola. It is composed of four major zones: Girassol-Rosa and Dalia, which are currently producing. The other partners are Sonangol (30%), Sonangol Sinopec International (SSI) Seventeen Limited (27.5%), ACREP Bloco 17 S.A. (5%), Falcon Oil Holding Angola S.A. (5%) and PARTEX Oil and Gas (Holdings) Corporation (2.5%). The consortium drilled the Canna-1 well in 2011 which discovered hydrocarbons in a reservoir of Miocene age and produced more than 5,000 barrels per day of high quality oil (33° API) during a production test.

FUTURE
The industry is getting increasingly excited about the prospects in the pre-salt region. So far, all indications are that the pre-salt in Angola is analogous in hydrocarbon bearing potential to the pre-salt regions of Brazil which host substantial reserves. The government of Angola is still mooting production sharing agreements for the pre-salt regions, and once this is done, new pre-salt blocks will be up for grabs. All indications are that exploration activity is bound to increase in Angola. Angola looks set to maintain its high production into the future and, if exploratory success comes from ongoing and future exploration, the country just might topple Nigeria in terms of production and reserves.

For a list of West African oil discoveries in 2010 - 2011 click here




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