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Emerging and existing oil and gas opportunities in sub-Saharan Africa

November 17, 2014 | Author: U. J. Itsueli

Look at the last full year 2013. The biggest oil and gas discoveries are all over the place, worldwide. Some in non-surprising areas, with others in new or frontier areas:

(1) Lontra – Angola – 900m boe
(2) B14/B17 – Malaysia – 850m boe
(3) Ogo – Nigeria – 775m boe
(4) Nene – Congo Brazzaville – 700m boe
(5) Agutha – Mozambique – 700m boe
(6) Tangawizi – Tanzania – 575m boe
(7) Coronado – Gulf of Mexico – 550m boe
(8) Salamat – Egypt – 500m boe
(9) Maximino – Gulf of Mexico – 500m boe
(10) Bay du Nord – Canada – 450m boe

Five of the above 10, totalling approximately 3.65b boe, are in sub-Saharan Africa. That is 2013 alone!

African oil and gas has seen very interesting times in the past five to 10 years. Some might even say “exciting times”, especially sub-Saharan Africa. Countries not usually referred to in oil and gas context have suddenly come into oil and gas reckoning. There is so much oil and gas yet to be discovered in sub-Saharan Africa.

Last year, Oil Review Africa, an oil and gas publication, said: “New energy-producing countries such as Uganda, Kenya, Ghana and Niger are set to redraw sub-Saharan Africa’s oil and gas map over the next five years, contributing to a significant increase in output and attracting top global companies.”

Wood MacKenzie said sub-Saharan Africa could be producing an extra 400,000 bpd by 2018, taking the region’s crude output to 7mbpd.

Mozambique and Tanzania are looking for and planning compression plants to liquefy gas. Mozambique’s gas reserves could be as much as 150tscf. Let’s look at Africa’s current production.

Nigeria and Angola are sub-Saharan Africa’s heavyweight producers. Between them, they produce just over 4mbpd. Currently, sub-Saharan crude oil production is just about 6.5mbpd, and natural gas is just about 200mn cubic metres per day. This could rise to 255mn cubic metres/day by 2018 and 360mn cubic metres/d by 2024.

Presently, about two-thirds of sub-Saharan Africa’s gas is exported as liquefied natural gas (LNG) from Nigeria, Angola and Equatorial Guinea. Mozambique may soon join.

Companies such as Tullow Oil, Anadarko, ENI, Global, Fastnet, Ophir, Azonto, Far, Chariot, Africa Oil, WHL, Pan Continental, Chevron, Total, Shell, Petrobras, ExxonMobil, Kosmos, Cove, etc have either taken up acreages or are exploring in new oil and gas countries such as Liberia, Sierra Leone, Kenya, Tanzania and South Africa.

The search for new oil and gas is on, big time! The Western Africa region – Morocco, through Mauritania, Ivory Coast, Nigeria, Gabon to Angola and Namibia – is arguably the hottest oil play in the world today. If you add the inland basins of Chad, Niger, South Sudan, the Rift Valley and additionally venture round the Cape of Good Hope and add the East African play, then definitely and unarguably, the sub-Saharan African play is the hottest.

In all this, the Nigerian play is the diamond in the crown. So, I shall concentrate on Western Africa and specifically on Nigeria.

Nigeria has been producing and exporting oil since 1956. Just under 60 years now. Play in this specific area has matured, with Nigerian-owned independent producers ever more active. Dubri Oil Company was the first Nigerian and African independent crude oil and gas producer. Dubri started production of oil and gas in 1987 – 27 years ago.

Currently, Nigerian independent companies are active both inside and outside Nigeria – Ghana, Uganda, Equatorial Guinea and Angola.

With reserves of over 37bbls of crude oil and 260Tscf of gas, Nigeria will remain a significant player in oil and gas on the world scene for a few years to come. Thus, I see the Nigerian independents playing an increasing role both within and outside Nigeria. Currently, they are estimated to be holding about 10bbls out of Nigeria’s 37bbls of crude oil reserves, and 45Tcf of gas, according to the DPR.

Within the past 24 months, Oando, quoted on both Toronto and Lagos Exchanges, bought the Nigerian interests of ConocoPhillips. Seplat, quoted on both London and Lagos Exchanges, bought some of Shell’s interests in Nigeria. A few others are quoted in London, Johannesburg, Lagos and Toronto Stock Exchanges.

However, I see the paradigm changing. The paradigm is changing on more than one front at the same time. This conference, the essence of which is to take another look at existing and emerging oil and gas opportunities in sub-Saharan Africa, in light of today’s realities, could not have come at a more opportune time. I congratulate the organisers. Here are why the paradigm is changing:

• Africa is home to 54 countries, and 6 of the 10 fastest growing economies on the planet. Consumer spending in Africa will climb to $1trn by 2020. There is tremendous demand for US goods and services in sub-Saharan Africa.

• More than half of consumer expenditure in sub-Saharan Africa comes from Nigeria and South Africa. This year Porsche, the German Car maker, stated that their Lagos operations met their annual targets in the first three months of the year. Rolls Royce has just opened a new franchise in Lagos. New real estate development in Nigeria is astronomical.

• UNICEF predicts that by 2050, there may be 1 billion Africans under the age of 18; and that by 2100, one in four people on the planet will be African.

• The African youth bulge, especially in sub-Saharan Africa, can be a tremendous purchasing machine.

• This, in an atmosphere of high GDP growth rates and an emerging middle income group, is the real emerging opportunity in sub-Saharan Africa.

• How to tap into this is what the US and the rest of the world should be looking at.

• No country exemplifies the challenges and ambiguities of demographic and economic growth like Nigeria.

• The Carlyle Group CEO, David Rubenstein, says the private equity industry in Africa will “take off”; that opportunities there are far greater than people thought a few years ago. Africa-focused PE firms raised $3.3bn in 2013, a 130 percent increase from 2007. Dangote and the Blackstone Group have committed to invest $5bn over the next five years in power projects in sub-Saharan Africa.

• The US, long Nigeria’s largest export market for our crude oil, has been extremely successful in producing additional oil and gas, mainly from recent Shale oil and gas activity. Nigeria was a top-5 oil supplier to the US. However, as reported by the US Department of Energy, the US has not imported a single barrel of oil from Nigeria since July 2014. This was the first such occurrence since records started being kept in 1973. This trend is likely to continue. To put the situation in perspective, at its peak in 2006, the US was importing 1.3m bpd from Nigeria. Most of this oil is now being exported to Asian countries.

• Nigeria is now Africa’s largest and most diverse economy, even if not the most sophisticated; and 26th in the world. Nigeria’s economy overtook South Africa’s earlier this year, following a rebasing and updating of the parameters.

• Only 15 percent of the GDP is from Resources, with Oil and Gas contributing 14 percent; Retail and Services contributing 51 percent; Agriculture 22 percent; Telecoms 8.7 percent; Manufacturing 6.7 percent; Entertainment & Films 1.2 percent. Current growth rate is 6.3 percent for 2014 and 6.5 percent is estimated for 2015.

• Nigeria’s new economic figures have shown that Nigeria’s economy is much more diversified than previously thought. Given the country’s population of 170m people, of which about 70 percent are young people, Nigeria has a large labour force, the 11th in the world, and a large market for consumer goods and services.

• Nigeria accounts for 2.35 percent of the world’s population. This means that one in every 43 persons on the planet resides in Nigeria. That’s a large demographic market for labour, goods and services. This translates to a frontier market for Foreign Direct Investment.

• It’s not just a large population, but the character of the population is changing. The Nigerian middle class jumped six-fold in 14 years, riding on growth rates that have exceeded 7 percent annually over the past 10 years, driven by steady growth in the non-oil sector.

• The Nigerian middle class (daily consumption between $2.0 and $20 in 2005 PPP) is estimated at about 23 million people. McKinsey Global recently reported that there are almost 40m Nigerians in the consuming class household – households with incomes more than $7,500.00. Further, the rebased GDP has shown opportunities in other areas, such as Manufacturing, Telecommunications & IT, Construction, Wholesale & Retail and Agriculture.

• However, a few warning clouds: The commodities cycle is drawing to a close! Demand from China is waning, as the character of her economy changes. This will impact commodities pricing.

The US Federal Reserve’s review of its assets buying programme will affect emerging economies like Nigeria. Thus the prospect of a rise in US interest rate, in the near future, is high. Crude oil prices are plunging.

All these mean that frontier and emerging markets, such as Nigeria, must contend with a paradigm shift regarding their commodities and exports. It’s time Nigeria rethinks its economic and growth strategies.

When we think oil and gas, we must move away from the conventional production of Crude oil and gas only. When we think oil and gas, we now need to move into value-added aspects of oil and gas – refining, LPG, CNG, LNG, urea/ammonia, petrochemicals, plastics, etc, plus services, maintenance and fabrication facilities in oil and gas. Turn Nigeria to the petroleum hub of Western Africa. That must be the 2015-2025 vision for Nigeria and West Africa’s oil and gas. Nigeria’s economy is more than 60 percent of West Africa’s. There are ample investment opportunities to create a Western African investment hub in Nigeria. That is gradually happening, board the train now!

Let me end by quoting Thomas Donohue, the president and CEO of the US Chamber of Commerce: “The United States is wisely pursuing trade and investment opportunities round the world…given that 95 percent of the world’s customers and 80 percent of its purchasing power lie beyond US shores…. Our strategy would be even smarter if Africa was a bigger part of the mix.”

Donohue is a wise man. I believe China and India have both seen these opportunities and are aggressively pursuing trade and investment in sub-Saharan Africa. The US must not lose its previous advantage here – the train is about to leave the station; please get on it!

U. J. Itsueli

http://businessdayonline.com/2014/1...rtunities-in-sub-saharan-africa/#.VG-1aeYcS00
 
Chairman’s Address to Annual General Meeting

Ladies and Gentlemen, welcome to Pancontinental's Annual General Meeting for 2014. Against the backdrop of a rather subdued market for junior oil and gas companies over the last 12 months, Pancontinental continues to pursue its strategic objective of discovery of large volumes of conventional oil and gas in favourable fiscal and geological settings.

We predict a resurgence of interest in conventional opportunities, as lower oil prices force a movement away from unconventional resources, particularly in the USA.

Pancontinental has had a very successful year on several fronts, including a major farmout of its Namibian offshore project in late 2013, and a historic oil discovery in Sunbird - 1, off the Kenyan coast, early in 2014. The Sunbird oil discovery this year follows the Mbawa - 1 gas discovery, also drilled by Pancontinental and its partners, in a different joint venture, in 2012.

The Company's cash position was strong at year - end and continues to be healthy, with reserves of some $ 8.5 million.

Your Company holds key positions in two of the globe's most exciting oil and gas provinces -- offshore Kenya and offshore Namibia. I have some brief comments, following which Barry Rushworth will provide more detail concerning our prospects. Pancontinental has a long - standing thesis that the Lamu basin, offshore Kenya, is an oil bearing province. This has proven to be correct, with the first-ever offshore Kenya oil discovery in the Sunbird - 1 well, drilled early in 2014. Sunbird is truly a "play opener" for offshore Kenya and for all of East Africa, as it is the first offshore oil column discovered over some 6,000 kilometres along the East African coast.

The Sunbird discovery has reversed a previous industry misconception, arising from the recent huge gas discoveries offshore Mozambique and Tanzania, that East Africa has potential only for gas. As a result of Sunbird, many major exploration groups are considering offshore Kenya in a new light.

With detailed knowledge of the newly proven oil system, the L-10A and L-10B joint ventures, led by the operator BG group, will focus future drilling on prospects that are large enough to host commercial oil reserves. In these permits, we have defined numerous prospects in varying geological settings, and these continue to be studied and rated by the operator. No formal recommendation has yet been put to the joint ventures for additional drilling, however we expect the operator to propose drilling one or two wells on large, oil-based prospects early in 2015, with a view to drilling possibly late 2015.

Sunbird has strongly increased the attractiveness to other companies of Pancontinental's three offshore Kenya project areas, and we are seeking to farm out for further drilling on these properties. This includes the offshore portion of L-6, although the onshore portion ASX ANNOUNCEMENT 28 November 2014 2 has already been farmed out for seismic and drilling during the past year. We expect a well to be drilled onshore L-6 in 2015, and your Company will be free - carried through the well, this, alone, is a very exciting opportunity, and we look forward to a positive outcome.

Pancontinental's previous L-8 licence, which includes the Mbawa gas discovery, expired in 2013. The Company is making representations to the Kenyan Government for a new licence over the L-8 area, and will report further on this matter in due course.

The Namibian EL 0037 area is an extremely exciting project, with early indications of very large and oil - prone drilling opportunities. Considerable international attention continues to be focused on Namibia, as the Namibian coast forms part of the tectonic "conjugate margin" with offshore Brazil, so the company is doubly enthusiastic about
these targets.

Under farmin by Tullow Oil, signed in 2013, Pancontinental has been free - carried through the acquisition and processing phases of extensive 3D and 2D seismic programs, and we are now firming up a number of drillable prospects. The total cost of these surveys is about 30 million dollars, of which Pancontinental's share was entirely paid by Tullow. Tullow must now free - carry Pancontinental's 30% interest through one future exploration well at an estimated cost of some 100 million dollars. The Tullow farmin has no "caps", meaning that the company will not have any overhanging financial exposure for work under the farmout. We believe this is an exceptional outcome for your company.

The EL 0037 prospects, presently being detailed, are comparable in size and geological character to some of the largest oil discoveries ever made off the coast of Brazil. We expect mapping of the seismic to be completed later this calendar year, and will be reporting more extensively when we have the full results.

I wish to thank our small and dedicated staff, who continue to produce results well in excess of expectations for an organisation of this size. I must remind you that companies of Pancontinental's activity level usually have a far larger staff, and consequently much greater overheads. Many such companies in no way achieve the positive outcomes that Pancontinental achieves.

Pancontinental continues to be regarded as one of the most notable junior explorers on the African scene. We look forward to building on this for the benefit of all shareholders in the forthcoming year.

H.D. (David) Kennedy, Chairman

http://clients2.weblink.com.au/clients/pancon/article.asp?asx=PCL&view=6702030

Other Reports from the General Meeting may be found at ;
http://pancon.com.au/investor-centre/asx-releases/
 
PCL now sitting around 6 year lows

Where to from here ????

Money to be made, or more to lose ?

At 6 year lows.jpg

There's more to oil prices than just supply and demand

http://www.theage.com.au/business/m...n-just-supply-and-demand-20141211-1252iz.html

December 11, 2014
Chris Tomlinson

Many factors feed into the oil rout, which triggered another sell-off on the New York Stock Exchange and other bourses this week.

Federal Reserve policy, the US dollar exchange rate and market speculators. These are just a few of the factors that help determine the price of oil.

Supply, demand and geopolitics factors help explain why the West Texas Intermediate benchmark price has dropped nearly 40 per cent since June. A boost in North American production, weakening economies in Europe and Asia and Saudi Arabia's desire to pressure rivals all contributed to the fall in global prices.

But they don't tell the whole story.

Oil is also a commodity, traded on international markets and used as a hedge against other investments. When trying to predict where oil will go next in the absence of OPEC action and changes in the global economy, these factors will have a profound effect.

The first thing to know is that oil is priced in US dollars. That linkage means when the US dollar goes up against the euro, the yen or another major currency, the price of oil goes down.

This past [Northern hemisphere] summer, investors learned that the Asian and European economies were slowing while the US economy was growing. They quickly bought dollars to invest in the US economy and between August and mid-November alone, the value of the dollar compared to a basket of other major currencies went up 8.1 per cent as the price of oil dropped.

Bets both ways

That's probably the simplest part of the story. Oil is also a commodity that sells on a futures exchange, making it an asset like gold, stocks, bonds or real estate. Oil producers offer contracts to sell oil in the future to guarantee they will get a minimum cash flow in case prices go down. Traders buy futures contracts because they think the price will be higher when the contract comes due.

Commodities dealers absorb risk in the market from producers who need to maintain cash flow. For example, traders who paid $US102 a barrel in June for December oil contracts are now selling it for $US65 and taking part of the hit that oil producers would have suffered if they hadn't sold futures contracts.

Several readers have written me to complain that speculators drove up oil prices, but it's not clear to me that traders intentionally tried to manipulate what is a huge market.

"People make bets in the market both ways. A lot of folks took the views that prices would continue to appreciate, and a lot of folks are taking the view now that prices will fall," said Michelle Foss, chief energy economist at the University of Texas' Center for Energy Economics. She said her team has looked for intentional manipulation of the oil market in recent years and hasn't found any evidence of it, but she added that low rates of return on stocks, bonds and other asset classes have brought inexperienced investors into commodities, and oil in particular, adding volatility.

"There are many, many, many more people that participate in the commodity markets now than there has ever been before," Foss said. "People move in herds, and once everybody in the corral is convinced the direction out the gate is one way or another, they go tearing off in that direction."

This is how the Federal Reserve's decisions are felt in the oil patch. By keeping interest rates low, the Fed sent investors searching for yield in the commodities market, often with borrowed money, and that created trouble.

'Something's got to give'

"There has been so much cheap money for people to throw at things for years now," Foss lamented. "Oil has been this weird thing that has remained highly valued, while the prices of metals, non-metal goods, agricultural goods and other commodities have given up 30 per cent to 40 per cent of their value from the 2008 peak. There was no way oil was going to hang out at those price levels. Something's got to give, and that's partly what's going on."

Which is how, in part, WTI dropped from $US109 in June to $US63.82 on Tuesday and $US60.94 on Wednesday. And there is no reason to believe prices are recovering anytime soon.

The Federal Reserve is tightening the money supply by no longer buying bonds and is expected to signal an interest rate hike will come next year. Central banks in Europe and Asia, meanwhile, are trying to kick-start those wavering economies, and that means investors will keep buying dollars and therefore keep oil prices low.

When it comes to the commodities market, the Chicago Board Options Exchange's Oil Volatility Index was 14.67 when the WTI price spiked in June and is now 39.68. The US Energy Information Administration's short-term outlook on Tuesday said "uncertainty relating to future oil supply remains pronounced."

That takes us back to the fundamentals of supply, demand and geopolitics. OPEC has said it will not cut supply, and no one knows how quickly other producers will take oil off the market to balance with demand. Global economic forecasts remain modest, which means demand is unlikely to go up. That leaves the geopolitical wild card, and there are no predictable disruptions to oil supply on the horizon.

No matter how you slice the data, low oil prices are with us for a while.

The New York Times


http://www.theage.com.au/business/m...n-just-supply-and-demand-20141211-1252iz.html


Small cap stocks lure performance chasers

http://www.cnbc.com/id/102257245

Dominic Chu | @TheDomino
Wednesday, 10 Dec 2014 | 2:05 PM ET

As 2014's trading days dwindle, some traders are turning toward small cap stocks in hopes of boosting their portfolio returns.

During Tuesday's sharp decline in U.S. equities and subsequent rebound, one notable outperformer was the Russell 2000 Index of small cap companies. While the Dow Industrials managed to recover 150 points from session lows and close lower by around a third of a percent, the Russell 2000 actually rose by 1.8 percent on the day. It was the best day for small caps since late October.

Of the 2,000 stocks in the index, 50 posted one-day gains of 10 percent or more, and one industry group in particular made up the bulk of the upside standouts—energy.

Energy stocks have been hit hard in 2014 due in large part to a decline in crude oil prices. As a result, the S&P 500 energy sector has lost 14 percent this year. That move lower has been filled with abnormally large swings in the stocks that are in that sector, and even more so with smaller capitalization companies that don't trade with as much ease and liquidity as larger names. The overall trend in the medium term has been to the downside for energy-related names, and that trend could continue.

"There's a long history of energy prices overshooting or undershooting any analyst's view of what fair value is, so we may continue to see some downward pressure for a while in the oil markets," said Atlantic Trust Chief Investment Officer David Donabedian. "I think the drop in oil prices is not yet a broad buying opportunity for energy stocks."

Despite the turmoil in energy markets, some Wall Street experts are telling their clients to avoid being fixated on falling oil prices. "We do believe that this is going to be temporary," said Mizuho Securities USA Chief Investment Strategist Carmine Grigoli. "You will have positive effects on the consumer, and production cutbacks are not expected to be enormous or significant that it will alter the economy."

Meanwhile, biotechnology, pharmaceutical and health-care companies overall have traded with more volatility than the overall market, but the trend has been higher prices. Health care is the best performing sector in the S&P 500 this year, with a gain of 26 percent. The Nasdaq Biotechnology Index has gained an even more impressive 37 percent in 2014. Biotechnology stocks are already viewed by many investors as volatile, and small cap stocks in the industry also trade with even more volatility.

Trading in small cap stocks has been a roller coaster ride, and after all that volatility, the Russell 2000 Index is still just positive by 1 percent for the year. Still, some market technicians, who study historical price patterns, say that small cap stocks are at an inflection point. Greywolf Execution Chief Technical Analyst Mark Newton thinks that if the Russell 2000 can manage to trade above its recent highs, it could lead to a period of outperformance that would accelerate.

"If the market were to stabilize today and [small caps] rally back up towards and over these highs, it would most likely drive the overall market higher into year-end, as everything would follow small caps," Newton said.

The recent action in small cap energy and biotechnology stocks presents an opportunity for some traders to attempt to use volatility to capture shorter term profits in the final three weeks of 2014. For many investors, the price action may be too much to stomach.

It's also important to note that even if there are elevated levels of volatility, the ability to garner outsized profits in trading small cap stocks is limited. Many of these stocks trade far less frequently than their larger cap cousins. There's a big difference between a stock that trades 200,000 shares a day, as opposed to one that trades 20 million shares daily.

The bottom line when it comes to small cap energy and biotechnology stocks is that it's traders who are conducting much of the traffic in those markets. Investors may want to spend a good amount of time evaluating their risk tolerance before subjecting themselves to the possibility of outsized losses. Many of the big gainers yesterday are some of the big losers in today's trade.


—CNBC's Gina Francolla contributed to this report.

http://www.cnbc.com/id/102257245
 
Eco (Atlantic) Oil & Gas to acquire Pan African Oil in Namibia

Friday, 26 December 2014 10:16

Canada-based oil and gas exploration company Eco (Atlantic) Oil and Gas has decided to acquire Pan African Oil in order to solidify its position as an explorer offshore Namibia

offshorenamibia-cclark395-flickrEco (Atlantic) Oil and Gas is exploring assets offshore Ghana and Namibia. (Image source: CClark395/Flickr)

According to officials at Eco (Atlantic) Oil and Gas, the agreement would be deemed an “all-share” deal, which would save costs and strengthen its position as a dominant license holder offshore Namibia.

Pan African Oil, an Africa-focused oil and gas explorer, operates two licenses in offshore Namibia, which covers around 13,000 sq km. The company has already completed the first term work commitments for both licenses, and has found a potentially new prospective geological fairway.

The Canadian explorer Eco (Atlantic) Oil and Gas owns and operates four licenses in Namibia, three of which have more than 21.5bn barrels of prospective resources, covering over 28,500 sq km in the Walvis Basin.

However, for the acquisition to be deemed complete, Pan African Oil is yet to grant two-thirds shareholder approval to Eco (Atlantic) Oil and Gas along with a regulatory clearance, added officials from both companies.

The Canadian company decided to explore waters offshore Namibia, which is considered a politically low-risk country. In July 2014, Ghana granted the Eco (Atlantic) Oil and Gas parliamentary ratification to acquire a 50.51 per cent working interest in Deepwater Cape Three Points West Block that lies 15 km south of Tullow Oil’s Jubilee Field.

http://www.oilreviewafrica.com/expl...n-oil-to-enhance-exploration-offshore-namibia
 
Kenya Govt, firms to face off over new tax on sale of oil blocks

Tax experts are already raising the red flag over the disparity in the enforcement of the capital gains tax, saying it would choke the growth of Kenya’s nascent petroleum and mining industry.

By JAMES ANYANZWA
Posted Saturday, January 3 2015 at 11:06

Companies seeking to raise new capital through the sale of their mining and oil blocks in Kenya will have to contend with new taxation measures that require up to 37.5 per cent of the mark-up to be remitted to the exchequer.

Guidelines for the just reintroduced capital gains tax (CGT) show that the net gain on disposal of interest in immovable property in the mining and petroleum industry will be taxed at 37.5 per cent for foreigners with permanent establishments and 30 per cent for residents.

The assessment, which is almost eight times that for net gains in property ”” land, buildings and investment shares at five per cent ”” is expected to kick off a fresh dispute between the government and prospectors even before the dust on the dispute on royalties settles.

“I do not see why investors in oil and gas should be taxed differently from other people. I think that is a little unfair. Petroleum and mining is still a nascent industry, which we require to succeed. But if you keep taxing these people, there are a lot of other places in the world they can go to get mining licences,” said Nikhil Hira, head of tax practice at Deloitte & Touche, East Africa.

However, National Treasury Cabinet Secretary Henry Rotich last week said the tax rates in the mining and petroleum sector could only be reviewed in the next budget.

“That is how it is in the law but we are still discussing with the industry, both the mining and petroleum, to see if there are any changes that can be addressed in the next Finance Bill. What we agree will be put in the next Finance Bill (2015/2016),” Mr Rotich told The East African.

Immovable property refers to a mining right, an interest in a petroleum agreement, mining information or petroleum information.The taxable gain, according to the Kenya Revenue Authority is the net gain arising from the disposal of an interest if the interest derives its value from immovable property in Kenya.

“We have to be careful because oil companies take a lot of risk in their exploration activities. While undertaking their drilling work, there is no guarantee they will get anything. Now what is happening is every additional shilling taxed reduces the funds available for them to carry out their exploration,” said Mr Hira.

According to Mr Hira, foreign companies that have registered branches in Kenya will dispose of their interests such as mining licences not necessarily to make a gain but to meet certain statutory requirements and /or to bring on board strategic partners to shore up their capital reserves.

“There is no gain they make in disposal of their interests. They are disposing of them to meet certain government requirements and to bring on board some partners to provide the necessary financial support required in exploration and drilling activities,” he said.

The tax on the net gains from the transfer of land, buildings and marketable securities came into effect on January 1, despite widespread concerns over its impact on stock and bond transactions and the blossoming property market in Kenya.

The government is looking to raise an estimated Ksh7 billion ($76 million) through the new tax measure before the end of the current (2014/2015) fiscal year.

Tax experts at the consultancy firm KPMG say reintroduction of the CGT will broaden Kenya’s tax base, increase revenue collection and align the country with its regional counterparts which all impose a similar tax.

http://www.theeastafrican.co.ke/new...-sector/-/2558/2577158/-/xt7md9z/-/index.html
 
Look out for in Kenya’s oil and gas sector in 2015

2015 continues to look promising for the oil and gas sector in Kenya with various planned projects expected to continue while new companies will begin work in the various acreages.

In our radar this January is the planned Badada-1 well in Block 9 located in the Anza basin which is expected to spud with the drilling contracts already awarded to Greatwall which will operate the GW-190 land rig while Aberdeen-based Norwell Engineering will manage the drilling operations.

Also expected this month (January 15th) is an update by joint partners Tullow Oil and Africa Oil in Blocks 10BB and 13T. In focus will be the results from the drilling of Engomo-1 wildcat well location the first test of the North Turkana Basin and results from the Ngamia-5 appraisal well which will help assess reservoir connectivity in the Ngamia field which has been the largest oil discovery to date in the South Lokichar Basin.

Also expected in the updates are the results on the Extended Well Testing in Amosing oil field where production and injection interference testing, involving the Amosing-1 and 2A wells, was to be carried out to help provide dynamic flow characterization of the Amosing stacked reservoirs.

On the seismic front various companies are expected to acquire data in various blocks with CAMAC Energy expected to acquire 2D seismic in blocks Block L1B onshore Kenya, and Block L16 partly onshore and partly offshore Kenya having already awarded contracts to BGP Kenya Limited and Polaris Seismic International Limited respectively.

Results are also expected in Q1 on the 3D seismic survey carried out in the Ekowasan area in Block 10BB in the South Lokichar Basin with acquisition expected to have been complete in December last year. Once the data is interpreted follow up drilling will target better developed reservoir expected between Amosing-1 and Ekosowan-1, further away from the faulting at the basin margin.

In January Australian explorer Far Ltd is also expected to announce an update on farm-outnegotiations in Block L6 with the announcement having been expected in Q4 2015.

Simba Energy has also announced it expects to sign a contract and commence the initial 2D seismic program of up to 400Km in Block 2A in the Q1 of 2015 designed to target drilling locations on prospects and leads in two basins, and also yield volumetric that will support revised resource estimates

http://abdas.org/?sn=look-out-for-in-kenya’s-oil-and-gas-sector-in-2015
 
Tullow Oil Announces Further Cuts In Exploration Expenditure

Posted on 15 January 2015.

Tullow Oil has cut further down its exploration expenditure for 2015. This is the second time Tullo is announcing cuts, and the Company announced that this move has been necessitated to enable the explorer “ strengthen the business to adapt to current market conditions.”

Late last year the company materially reduced its 2015 exploration capital expenditure and today announce a further cut to this expenditure to $200 million. “We continue to carry out a review of the business to streamline processes and improve efficiencies which will result in significant long-term cost savings says CEO Aidan Haevey.

Tullow Oils says it has now re-allocated future capital to focus on delivering high-margin oil production in West Africa which will grow significantly to around 100,000 bopd net to Tullow by the end of 2016 and will generate stable, long-term cash flows for the business. The reduced exploration programme will predominately focus on a number of high-impact, low-cost exploration opportunities in East Africa.

“While this is a challenging time for our sector, Tullow is fortunate to benefit from world-class, low-cost and high-margin assets, strong and growing cash flows and a broad, diversified funding position.” Aidan adds.

Meanwhile, the company says the South Lokichar Exploration and Appraisal programme continues with drilling recently completed at the Ngamia-5 and Ngamia-6 wells. In addition, the Amosing wells are being prepared for the first Extended Well Test in Kenya. The frontier exploration programme continues outside of the South Lokichar basin with the result of the Epir-1 well expected later this month. The Engomo-1 well, testing the Turkana West Basin, has commenced drilling, while the Lekep-1 well, testing the Kerio Valley Basin, is expected to be drilled in the second half of 2015 along with multiple appraisal wells in South Lokichar as work progresses on the East Africa development plan

http://oilinkenya.co.ke/tullow-oil-announces-further-cuts-in-exploration-expenditure/
 
Deloitte Report Into Kenya Oil Industry Calls For Policy Review

Posted on 19 January 2015.

Deloitte Report Into Kenya Oil Industry Calls For Policy Review
Kenya needs to relook its current tax policy stance regarding the upstream oil industry in order to attract foreign investors, a new report by Deloitte East Africa has counseled.

The report titled ‘Kenya’s Petroleum Fiscal Regime Expansive Coverage’, notes that some aspects of the policy, which is generally favourable to FDI, needs to be re-examined to sustain the momentum that is already building in the industry.

Given that Kenya is competing for a limited pool of FDI with neighboring economies including Uganda and Tanzania, the fiscal regime needs to strike a balance between incentives to encourage foreign investments, while ensuring a return for its development agenda.

“An overly generous fiscal regime weakens government returns and can sow seeds of an adverse political backlash for the country yet again a very tough one can stifle the incentives for oil companies to invest in the sector hence reduced FDI,” says Denis Kakembo, the Senior Tax Manager at Deloitte East Africa, and one of the researchers and report authors.

The report singles out farm down transactions, through which oil firms that have struck oil sell a stake in their discovery rights to other firms to split the cost of investing into actual production, as one of the aspects that could be improved to attract foreign investors.

“Not all farm down transactions generate windfall profits. In fact, such farm down transactions present a real opportunity for big oil companies to acquire working interest in the country’s petroleum sector that is originally dominated by smaller oil companies,” the report states in part.

Mr Kakembo adds that these transactions are critical to the industry since smaller oil companies de-risk the geological circumstances of the country in which they discover oil, thus enabling international oil companies to convince their shareholders to invest.

The new report comes against a backdrop of a string of oil discoveries in Kenya by different oil exploration firms. It is expected that commercial production of oil could begin in 2017.

The Deloitte report counsels the government against taking ‘an exceedingly short term view of maximizing revenue collection’ from natural resource projects such as oil finds. It argues that enforcing high and unsuitable taxes may affect investment to the nascent sector.

The report commends Kenya’s petroleum fiscal regime for managing to ‘tread the intricate and complex path of converging government objectives with the international oil companies’.

By Oil In Kenya

http://oilinkenya.co.ke/deloitte-report-into-kenya-oil-industry-calls-for-policy-review/
 
Falling global oil prices begin to take toll on search work in Kenya

By IMMACULATE KARAMBU
Wednesday, January 21, 2015

Swala Energy, an Australian firm prospecting for oil and gas in western Kenya, could exit without drilling a single well in the block as the impact of falling global crude prices takes a toll on its operations.

The firm said it had appointed UK’s FirstEnergy as a financial adviser in preparation for a merger or complete sale of the company.

This comes as falling global crude prices continue to impact negatively on the upstream oil and gas sector, with some exploration firms having already announced plans to reduce their budgets.

“Accordingly, Swala board of directors has appointed FirstEnergy to manage a process with the view of reviewing the company’s options to maximise the long-term value of the company’s potential including a potential merger or sale of the company,” reads a statement sent to the Australian Securities Exchange.

CUTTING GLOBAL BUDGET

The announcement comes barely a week after Tullow Oil Plc, which has made discoveries in northern Kenya, said it was cutting its global exploration budget by a third “to adapt to current market conditions.”

Swala Energy is licensed to explore block 12B where it holds an equal stake with Tullow Oil. It also has operations in Tanzania and Zambia.

In October, the firm announced that it would drill the first well in the block during the second half of this year, following successful acquisition of data, which revealed 10 leads indicating a possible presence of oil or gas. The new development could further delay exploration activities in western Kenya.

The World Bank had in the Global Economic Prospects report released earlier this month warned that declining crude oil prices could discourage investment in exploration and development, specifically for new undertakings.

The Australian company is also considering a similar action ”” a farm-down on its assets in the three countries it operates.

Swala recently shelved a plan to raise Sh378 million that was partly meant to finance its exploration programme in the country due to what it termed as an unfavourable market brought about by the decline in prices of crude oil currently below $50 a barrel.

Block 12B lies within the Nyanza Rift Basin, which is part of the East African Rift System where other discoveries of oil and gas have been made, making it a prime target for acquisition.

“The completion of our seismic survey programmes and the clear indication from them of a large number of significant leads and prospects within our licences make this an opportune time to review the company’s options to maximise value from its portfolio ahead of the planned 2015 drilling campaign,” Chief Executive David Mestres Ridge said.

http://www.nation.co.ke/business/Sw...ces-Kenya/-/996/2597594/-/iwnllq/-/index.html
 
Kenya - Capital Gains Tax could discourage large international oil and gas companies
Sunday, January 25, 2015

A consultancy firm has warned that capital gains tax could discourage large international oil and gas companies from the local industry even as Kenya prepares for commercial production.

A study of Kenya’s petroleum regulatory environment carried out by Deloitte singled out administration of capital gains tax on farm down transactions as having the potential to slow down exploration.

Farm down refers to the practice by oil and gas companies to sell all or part of their exploration interests to other firms.

Deloitte urges the government to develop guidelines on administration of the tax that ensure it is only applied to the portion of the gains from such transactions that are not meant to be re-invested in exploration and production activities.

FISCAL REGIME DRAWBACK

“The only drawback with the fiscal regime, which has the potential to derail the momentum building, is the unclear tax policy position on farm down transactions. Not all farm down transactions generate windfall profits. They represent a real opportunity for big oil companies to acquire working interest in the country’s petroleum sector originally dominated by smaller oil companies,” reads the report.

International oil and gas exploration companies enter into farm down agreements for various reasons, including fund-raising for future undertakings, and to make profits out of exploration.

The most common such transactions are those involving small-sized exploration firms, which are the original exploration licence holders, selling their interest to large companies, mostly after acquisition of data, which indicates high potential of oil and gas deposits in the specific areas.

Capital gains tax was suspended in 1978 to accelerate growth of the capital markets and real estate sectors, but was re-introduced last year as a move to increase revenue collection by the government.

The tax, which became effective on the January 1, will be applied at the rate of 30 per cent on gains involving sale of rights by resident companies in the extractive sector and 37.5 per cent in similar transactions involving non-resident firms.

Since its re-introduction, the tax has been met with varied reactions, with some analysts and investors expressing fears that it will discourage investment in the local sectors.

Last year, Africa Oil Corporation of Canada ”” Tullow Oil’s exploration partner ”” announced that it would team up with the Kenya Oil and Gas Association (Koga) an industry lobby, to push for an amendment to reduce the tax.

“Africa Oil, alongside the industry representative body is working closely with all levels of the Kenyan Government to discuss the potential negative impact such a tax policy will have on the development of the still early-stage oil exploration industry.

“This will include potential barriers to entry for new investors, erosion of present investor confidence and potential delays to exploration and development activity,” chief executive Keith Hill said in response to the Finance Act 2014.

On Thursday last week, Mr Hill said the company was in talks with the government to resolve the remaining tax and fiscal issues this year. Kenya has discovered oil at Lokichar basin estimated at over 600 million barrels, which is above the minimum threshold for commercial exploitation.

http://www.nation.co.ke/business/Ca...te-Report/-/996/2602114/-/og2wmm/-/index.html
 
Thursday, January 29, 2015 - 10:00 -- BY JAMES WAITHAKA

Australian exploration firm Pancontinental Oil and Gas NL’s sale of a portion of its interest in Block L6 onshore on the Kenyan coast to a third party has shielded it from ongoing exploration expenditure.

In its 2014 annual report, the firm says it farmed out over half of its previous holding in the block, 24 per cent stake, to Milio International and retains 16 per cent interest from 40 per cent previously. Milio is now the operator of Block L6 onshore with 60 per cent interest.

Pancontinental’s report discloses that its joint venture partner, FAR Ltd, ceded 36 per cent and now retains 24 per cent. Milio’s initial investments included carrying out a 2D seismic survey of not less than 1,000 square kilometres in late 2014, in which it would free-carry the other two partners.

It would also incur costs in drilling and testing a well, besides financing processing and interpretation of survey results. In March 2014, the company made the historic discovery of the first ever oil deposits in offshore Kenya on Sunbird-1 well. -

http://www.the-star.co.ke/news/oil-firm-saves-exploration-costs-after-stake-sale
 
Exploration stalls in Africa as oil price declines

by Paul Burkhardt


AFRICA’s oil and gas boom is in jeopardy. The dash for resources that saw explorers invest billions of dollars to tap promising oil fields from Ghana on the west coast to Tanzania on the east, is stalling as the global drop in crude prices pushes drillers to reconsider the high costs of exploration on the continent.

For many drillers, 2014 was already failing to reach the promise seen in 2013 when half of the world’s 10 largest oil and gas finds were made in Africa.

With oil prices dropping below $50 a barrel, analysts say they expect a more concentrated pullout this year.

“Now that we’re at another weak oil price, every company will be reviewing discretionary spending,” said BMO Capital Markets analyst Brendan Warn.

In Africa’s frontier environment, drilling may bring a higher reward, but since most exploration takes place offshore, single wells can cost hundreds of millions of dollars, increasing the industry’s susceptibility to lower oil prices.

Chairman of Global Pacific & Partners (which advises African governments) Duncan Clarke said cuts had already begun. They include “budget cutbacks, asset sales, some corporate consolidations, more farm-outs, slower acreage pick-up, tougher operating conditions, and weaker overall margins for producers,” he said.

Following major discoveries in 2013 in countries including Tanzania and Kenya, the Baker Hughes Rig Count reported 154 rigs in Africa last February, the most since 1983. By December, that had declined to 138.

Ophir Energy, a UK explorer that has made several large finds in Tanzania, ended its 2014 drilling campaign in Gabon in June, after a series of dry holes.

Repsol, Spain’s biggest oil producer, spent almost $100m on a well that missed in offshore Namibia.

Tullow Oil, a British oil company that was among the most active explorers in Africa, said last week it would not drill a single offshore exploration well in the continent this year, as it reduces investment in response to lower prices.

For Africa to revive the momentum of its oil and gas industry, governments needed to look at the terms they offered explorers and adapt them to reflect lower prices, Tullow CEO Aidan Heavey said.

“As more and more companies are pulling back, you’ll see that countries will have to change their terms,” Mr Heavey said last week. “We will be renegotiating our exploration licence terms.”

Tullow has cut its exploration and appraisal budget of $1bn more than two-thirds and will focus on onshore drilling in East Africa, where it has been able to reduce well costs to $7m each.

“It’s going to be the operators who are going to have to control costs,” the head of oil and gas advisory for sub-Saharan Africa at Deloitte & Touche, Claude Illy, said. Exploration would be cut “quite drastically”, he said

The silver lining for companies obligated by lease terms to drill could be lower service costs.

“Exploration in general will receive less funding due to the fall in oil prices,” Chariot Oil & Gas CEO Larry Bottomley said on January 9 in response to questions. “What we have seen, though, is a significant decrease in exploration costs, specifically seismic and drilling, so although there are fewer dollars, those dollars will go further.”

The cost of conducting a 3D seismic survey had dropped to $3,500 a square kilometre from $10,000 a year earlier, Ophir CEO Nick Cooper said in November at an oil convention in Cape Town. Ophir was not available immediately to respond to a request for updated costs.

Drilling service companies such as Milan-based Saipem might see orders drop 30% with oil at less than $80 a barrel, said Sanford C Bernstein analysts in a January 19 research note, and the cost of hiring offshore rigs might fall 40%.

Not all companies have put off plans. “The majority of our current development and near-term exploration drilling is offshore Nigeria, where typically the production costs are a little lower than other exploration areas,” Camac Energy spokesman Lionel McBee said. “In this price environment, we’re not going to be expanding exploration drilling. We’re sticking to our development programme.”

Some projects, such as completing of SA’s first deepwater well, which Total suspended due to technical issues last year, may not be realised for as long as the under-$50 environment lasts. The company did not reply to an e-mail inquiry about drilling plans in SA.A general view shows an oil rig used in drilling at the Ngamia-1 well on Block 10BB, in the Lokichar basin, which is part of the East African Rift System, in Kenya.

AFRICA’s oil and gas boom is in jeopardy. The dash for resources that saw explorers invest billions of dollars to tap promising oil fields from Ghana on the west coast to Tanzania on the east, is stalling as the global drop in crude prices pushes drillers to reconsider the high costs of exploration on the continent.

For many drillers, 2014 was already failing to reach the promise seen in 2013 when half of the world’s 10 largest oil and gas finds were made in Africa.

With oil prices dropping below $50 a barrel, analysts say they expect a more concentrated pullout this year.

“Now that we’re at another weak oil price, every company will be reviewing discretionary spending,” said BMO Capital Markets analyst Brendan Warn.

In Africa’s frontier environment, drilling may bring a higher reward, but since most exploration takes place offshore, single wells can cost hundreds of millions of dollars, increasing the industry’s susceptibility to lower oil prices.

Chairman of Global Pacific & Partners (which advises African governments) Duncan Clarke said cuts had already begun. They include “budget cutbacks, asset sales, some corporate consolidations, more farm-outs, slower acreage pick-up, tougher operating conditions, and weaker overall margins for producers,” he said.

Following major discoveries in 2013 in countries including Tanzania and Kenya, the Baker Hughes Rig Count reported 154 rigs in Africa last February, the most since 1983. By December, that had declined to 138.

Ophir Energy, a UK explorer that has made several large finds in Tanzania, ended its 2014 drilling campaign in Gabon in June, after a series of dry holes.

Repsol, Spain’s biggest oil producer, spent almost $100m on a well that missed in offshore Namibia.

Tullow Oil, a British oil company that was among the most active explorers in Africa, said last week it would not drill a single offshore exploration well in the continent this year, as it reduces investment in response to lower prices.

For Africa to revive the momentum of its oil and gas industry, governments needed to look at the terms they offered explorers and adapt them to reflect lower prices, Tullow CEO Aidan Heavey said.

“As more and more companies are pulling back, you’ll see that countries will have to change their terms,” Mr Heavey said last week. “We will be renegotiating our exploration licence terms.”

Tullow has cut its exploration and appraisal budget of $1bn more than two-thirds and will focus on onshore drilling in East Africa, where it has been able to reduce well costs to $7m each.

“It’s going to be the operators who are going to have to control costs,” the head of oil and gas advisory for sub-Saharan Africa at Deloitte & Touche, Claude Illy, said. Exploration would be cut “quite drastically”, he said

The silver lining for companies obligated by lease terms to drill could be lower service costs.

“Exploration in general will receive less funding due to the fall in oil prices,” Chariot Oil & Gas CEO Larry Bottomley said on January 9 in response to questions. “What we have seen, though, is a significant decrease in exploration costs, specifically seismic and drilling, so although there are fewer dollars, those dollars will go further.”

The cost of conducting a 3D seismic survey had dropped to $3,500 a square kilometre from $10,000 a year earlier, Ophir CEO Nick Cooper said in November at an oil convention in Cape Town. Ophir was not available immediately to respond to a request for updated costs.

Drilling service companies such as Milan-based Saipem might see orders drop 30% with oil at less than $80 a barrel, said Sanford C Bernstein analysts in a January 19 research note, and the cost of hiring offshore rigs might fall 40%.

Not all companies have put off plans. “The majority of our current development and near-term exploration drilling is offshore Nigeria, where typically the production costs are a little lower than other exploration areas,” Camac Energy spokesman Lionel McBee said. “In this price environment, we’re not going to be expanding exploration drilling. We’re sticking to our development programme.”

Some projects, such as completing of SA’s first deepwater well, which Total suspended due to technical issues last year, may not be realised for as long as the under-$50 environment lasts. The company did not reply to an e-mail inquiry about drilling plans in SA.

http://www.thepromota.co.uk/exploration-stalls-africa-oil-price-declines/
 
East Africa to witness more auctions of exploration blocks in 2015

Posted on 14 February 2015.

East Africa to witness more auctions of exploration blocks in 2015
Amid growing pressure for transparency and accountability, East Africa is going through a wave of change in the management of exploration and production rights of its newly struck oil and gas resources

EADespite the falling crude prices, Tullow Oil has said they will continue their drilling and production activities in Kenya and Uganda. (Image source: Derek Keats/Flickr)

According to Simon D’ujanga, energy minister of Uganda, the country has approved plans to open up six exploration blocks in Albertine Basin in Uganda for licensing.

“The government plans to invite companies to participate in this licensing round during the first quarter of 2015,” added D’ujanga.

Uganda’s petroleum resource is now estimated to be more than 6.5bn barrels of oil, an upward revision from 3.5bn barrels that was estimated in August 2012.

Tanzania has already received bids for some of the eight oil and gas blocks it offered in its latest competitive bidding round, noted the minister.

“China-based CNOOC and Russia’s state-run Gazprom were among companies that submitted bids for the blocks on offer in the fourth round. Statoil and ExxonMobil, which have made big gas discoveries offshore Tanzania, submitted a joint bid for one of the offshore blocks,” added D’ujanga.

Abu Dhabi state-owned investment fund Mubadala applied for offshore Block 4/2A in Tanzania, which covers an area of 3,630 sq km, while another UAE firm Ras Al Khaimah Gas has submitted a bid for the Lake Tanganyika North Block with a size of 9,670.2 sq km, he revealed.

Martin Heya, head of petroleum at Kenya’s Energy and Petroleum Ministry, said, “Kenya also plans to switch to bidding rounds to license its oil exploration blocks, moving away from one-on-one negotiations with firms, as interest in its economy increases following a recent oil discovery.”

The competitive bidding will be carried out through a proposed law known as the Petroleum (Exploration, Development and Production) Bill, 2015 that is awaiting Parliamentary approval, noted Heya.

“Exploration interest in Kenya has surged since the country announced a three year ago its first oil strike discovery by UK-based explorer Tullow Oil in the country’s north. The country has since recorded multiple discoveries,” added Heya.

Silvana Tordo, analyst at Brandon S Tracy, said that Kenya has mapped out at least eight additional exploration blocks that will be put up for bidding under the proposed laws. Uganda and Kenya are on track to become oil exporters by late 2018 or early 2019, he added.

Source: oilreviewafrica.com

http://oilinkenya.co.ke/east-africa-to-witness-more-auctions-of-exploration-blocks-in-2015/
 
ASX RELEASE

ACQUISITION OF PARTICIPATING INTERESTS – EP104, R1 & L15

Key Petroleum Limited (“Key” or the “Company”), is pleased to advise that the Company has executed a Sale Agreement to acquire Pancontinental Oil & Gas NL (“Pancontinental”) and FAR Limited’s (”FAR”) interests in Exploration Permit 104, Retention Lease R1 and Production Licence L15 located in the Canning Basin.

http://clients2.weblink.com.au/news/pdf2\01601492.pdf
 
Exploration slows down in Kenya as rig count falls

February 27, 2015

The number of drilling rigs in Kenya is expected to significantly fall in Kenya in 2015 as oil companies cut down on exploration as well as the main players’ ramp up their exploration and appraisal program.

According to Africa Oil a joint partner with Tullow Oil in blocks 10BB, 13T and 10BA the partners had five rigs towards the end of 2014 one in Block 9 where Africa Oil is the operator together with its partner Marathon Oil.

In 2015 as the company concentrates on appraisal and development of the discovered basin in Northern Kenya, the Africa Oil – Tullow partnership has released one of its four rigs.

Later this year, by the end of the second quarter the partners will again release two additional rigs remaining with just one single rig operating in Kenya.

“The focus of the work program in 2014 was drilling out the remaining prospect inventory in the discovered basin in Northern Kenya, appraising existing discoveries, drilling new basin opening wells and progressing the development studies towards project sanction for the discovered basin in Northern Kenya,” says Africa Oil in a statement.

Already the partners have drilled 23 wells in Northern Kenya 17 of which have been successful.

In Ethiopia Africa Oil is also pulling back two rigs from Ethiopia’s South Omo Block and Blocks 7/8.

All is however not lost as a number of other players in other basins are beginning their drilling programmes including Rift Energy, Swala Energy, Bowleven with others like ERHC starting their program in 2016.

http://www.oilnewskenya.com/?p=2641
 
CHANGE OF REGISTERED OFFICE AND ADDRESS

Pancontinental (ASX: PCL) advises that its registered office and principal place of business has changed to:

Office Address: Level 1, 10 Ord Street, West Perth WA 6005
Mailing Address: PO Box 1154, West Perth WA 6872
Telephone Number: (08) 6363 7090
Facsimile Number: (08) 6363 7099

Pancontinental Oil & Gas NL
 
Kenya oil sector gets boost on US-based firm drilling pledge

By JOHN GACHIRI
Posted Sunday, March 8 2015 at 14:44

Kenya’s oil and gas exploration has received a boost after Houston-based Anadarko Petroleum said that it will go ahead with its local drilling programme despite cutting its budget for other markets.

Anadarko said it had to cut its exploration budget by a third due to the falling oil prices which is at a five-year low. The reduction in the exploration budget will mostly affect its US-based blocks but work on its Lamu-based blocks will continue this year.

“In 2015, Anadarko expects to drill nine to 12 deep water exploration/ appraisal wells focusing on play-opening exploration opportunities in Colombia, Kenya and the Gulf of Mexico,” said the company in a statement.

Anadarko did not give a breakdown of how many wells it plans to drill on its five Lamu Basin blocks or how much it has budgeted for the local work but offshore drilling is significantly more expensive than onshore drilling.

Offshore drilling can cost as much as $150 million (Sh13.56 billion) while an onshore equivalent can requires between $20 million (Sh1.82 billion) and $25 million (Sh2.28 billion).

Analysts say that oil explorers are continuing their searches despite the falling prices on confidence that they will find large deposits.

“BG Group of the UK is planning to drill two offshore wells in its blocks located in Mombasa at a cost of $160 million (Sh14.4 billion). There is consensus among exploration firms that the region still promises strong finds that justify continued investment,” said the 2014 fourth quarter Natural Resources report by Burbidge Capital.

Tullow Oil, Taipan Resources, Simba and ERHC Energy are other explorers that have drilling programmes for 2015.

Continued exploration is also expected to benefit local companies that offer supporting services such as logistics, security and construction.

http://www.businessdailyafrica.com/...boost-/-/539552/2646222/-/96aqly/-/index.html
 
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