Exploration

The enlarged Africa Oil is expected to have significant scale. (Image source: Adobe Stock)

Africa Oil Corp has announced its financial and operating results for the three and six months ended 30 June 2024

Africa Oil president and CEO, Roger Tucker, said,“It was an incredibly busy first half of the year as we signed three strategic transactions, taking Africa Oil towards the next phase of value creation and shareholder returns. We have high-quality development projects, high-impact exploration and appraisal catalysts that will all be funded on completion of these deals. The quality of our organic growth opportunity set is demonstrated by the size and calibre of our partners.

"The Prime consolidation once closed, will see the roll-out of a new transparent capital allocation framework and will create scope for a significantly enlarged capital returns programme for our shareholders. Africa Oil stands with a differentiated investment case of offering sustainable shareholder returns, significant organic growth opportunities, and is well-positioned to pursue new opportunities on the back of a strong balance sheet.” 

According to a definitive agreement for proposed reorganisation with BTG, Africa Oil will hold 100% of Prime with BTG Oil & Gas receiving newly issued common shares in Africa Oil, representing approximately 35% of the outstanding share capital of the enlarged Africa Oil. This move aims to create a strong and differentiated upstream oil and gas company. The enlarged Africa Oil is expected to have significant scale with robust long-term free cash flows and a low leverage balance sheet, driven by large-scale and high netback assets in deepwater Nigeria. This will be complemented by funded development and exploration projects in the prolific Orange Basin.

Completion of the proposed reorganisation is targeted to occur during or before Q3 2025 and is subject to, among other conditions, Africa Oil shareholder approval, customary consents and approvals from the Nigerian authorities, the TSX and Nasdaq Stockholm, completion of the previously announced farm-down of Africa Oil’s Namibian interests that are held via Impact, and a reorganisation of the holding structure of BTG Holding to implement the amalgamation agreement. 

Namibia: Venus opportunity in Orange Basin 

In Namibia Orange Basin, the drilling and test results from Venus-1X, Venus-1A, Venus-2A and Mangetti-1X (Venus interval), completed in 2023 and H1 2024, support the development of the Venus oilfield. The technical studies to be carried out during 2024 are expected to define the Venus development concept.

In addition to the Venus opportunity, the company has retained upside exposure to appraisal and exploration opportunities that, in a success case, could significantly increase the existing discovered resource base on Blocks 2912 and 2913B. Processing of data from the 3D seismic data survey that was completed during H1 2024, could better define the prospectivity on Block 2193B to the south of the Venus discovery. The joint venture will consider drilling further high-impact exploration wells on separate fan structures on this Block in late 2024 or 2025 once the 3D seismic interpretation work is completed. The Mangetti-1X exploration well, located approximately 35km to the Northwest of the Venus-1X well, also intersected hydrocarbon bearing intervals in the Mangetti and Venus fans. The operator has commenced planning of a well to appraise the Mangetti Fan.

Nigeria: High production efficiency 

The Agbami field in Nigeria has delivered higher production efficiencies and lower decline rates than planned during H1 2024. The operator has also rescheduled planned maintenance from H1 2024 to H2 2024 resulting in production exceeding plan for both Q2 2024 and H1 2024. The asset remains on target to meet or exceed its production plan for 2024. The Agbami 4D M3 seismic acquisition survey started in Q2 2024. The survey is expected to conclude during Q3 2024, which will be followed by processing of the seismic and detailed planning of the proposed drilling campaign expected to commence late 2025/ early 2026. 

Last year, Dangote Petroleum Refinery and Petrochemicals plant purchased 1 mn barrels of Agbami crude grade from Shell International Trading and Shipping Company Limited.

The Egina field has also performed above plan during H1 2024 as a result of higher production efficiency than forecast.

In Q2 2024, the Akpo FPSO celebrated 15 years LTI-free. During H1 2024, two new producers and one injection well were brought online at Akpo West, a subsea tie back to the Akpo FPSO. Both of the new production wells are producing above expectation. H1 2024 production at Akpo has been impacted by the planned one-month maintenance outage. Full field production resumed from the shutdown in mid-April, with production rates at the end of Q2 2024 over 16% higher than the production rates at the start of 2024, primarily as a result of the successful infill drilling campaign.

The commitment to the drilling rig has been extended, allowing drilling to continue across the Akpo & Egina fields through 2025. An extensive seismic acquisition campaign was completed in Q2 2024, with surveys taken in Akpo, Preowei, and Egina. The seismic acquisition campaign has established a baseline survey for the Preowei field, and 4D monitor surveys for Akpo and Egina. The latest 4D surveys will be used to guide the infill drilling program and to assist with reservoir surveillance activities.

The first phase of the Preowei Field front end engineering design (FEED) was completed in Q2 2024, with phase 2 expected to be concluded in Q3 2024. FEED studies are aimed at supporting a FID decision on the project and enabling Engineering, Procurement, Construction and Installation (EPCI) to commence in 2025.

South Africa: Drilling in 2025

The company acquired an additional 1.00% interest in Block 3B/4B in South Africa from Eco. It also announced a farm down agreement for Block 3B/4B with TotalEnergies and QatarEnergy, which includes the transfer of operatorship of the Block to TotalEnergies for a total consideration, including the carry, of up to US$46.8mn. The closing of both transactions is subject to government approval and is expected in 2024. On completion of these transactions, the company will retain a non-operated 18.00% interest in the Block.

Subject to obtaining the requisite approvals, the first exploration well on Block 3B/4B could be drilled during 2025.

Contracts with multiple scopes accounted for 9%. (Image source: GlobalData)

Global oil and gas contract activity witnessed a notable 47% quarter-on-quarter increase in total disclosed value to reach US$54.91bn in Q2 2024 from US$37.3bn in Q1, reveals GlobalData

The data and analytics company's latest report, 'Oil and Gas Industry Contracts Review by Sector, Region, Terrain and Top Contractors and Issuers, Q2 2024', reveals that the overall oil and gas contracts volume decreased marginally from 1,473 in Q1 2024 to 1,377 in Q2 2024. 

Pritam Kad, oil and gas analyst at GlobalData, said, “Petrobras' monumental awards, including the US$8.15bn P-84 and P-85 FPSO construction contract to Seatrium, the US$1.8bn contract for subsea engineering to the Sapura consortium, and an additional US$2.5 billion for pipelay vessels, rigid risers, and flowlines contracts to Subsea 7, were the driving forces behind the surge in the overall oil and gas contracts value.”

Operation and Maintenance (O&M) scope reported 681 contracts, accounting for 49% of the total contracts in Q2 2024, followed by procurement with 400 contracts representing a 29% share. Contracts with multiple scopes, such as construction, design and engineering, installation, O&M, and procurement, accounted for 9% of the contracts. 

Of the biggest contracts signed in Africa during this period, Saipem was signed in by TotalEnergies to cover SURF, FPSO and O&M scopes. 

Deals in Middle East and Africa

The other notable contracts include Samsung Engineering, GS Engineering & Construction, and Nesma & Partners’ $7.7 billion EPC contract from Saudi Aramco for Fadhili Gas plant expansion from 2.5 to up to 4 billion standard cubic feet per day (bscfd) in Saudi Arabia; Tecnimont-led consortium’s US$2.3bn EPC contract from Sonatrach for three gas boosting stations with 20 turbo-compressor trains in Algeria; and Saipem’s US$850mn rigid pipelines, flexible flowlines, jumpers, and umbilicals work for Azule Energy’s Ndungu field development in Angola. 

In Senegal, a subsea inspection, maintenance, and repair (IMR) services framework agreement for the Sangomar offshore field was signed between Woodside Energy and DeepOcean as recently as in June. 

Area 2 lies within the emerging South Africa and Namibia (SANAM) super-basin. (Image source: Impact Oil & Gas)

Impact Africa Ltd by Impact Oil & Gas Limited has entered into an agreement with Silver Wave Energy Pte Ltd to acquire its entire interest (10%) in Area 2, offshore South Africa

Impact currently owns a 90% participating interest and operatorship in Area 2, acquired from Silver Wave Energy in 2020. Following completion of this transaction, the company will own 100% of Area 2. 

Last month, Africa Energy Corporation announced move for a complete ownership of Block 11B/12B offshore the Republic of South Africa, as TotalEnergies EP South Africa BV and QatarEnergy International E&P LLC called quits from the region. 

Area 2 sits outboard of, and compliments, Impact’s Transkei & Algoa blocks, off the east coast of South Africa. Together, the blocks extend the entire length and breadth of the deepwater part of the east coast margin, covering a combined area of approximately 125,000 sq km across a very exciting frontier exploration area, with plays extending across both blocks.

Closing of the transaction is subject to customary conditions, including the approval of the Government of South Africa.

High-calibre exploration block

Area 2 lies within the emerging South Africa and Namibia (SANAM) super-basin, which stretches from northernmost Namibia to the Durban Basin of eastern South Africa. The Block shares the same prolific petroleum play as is currently being successfully explored in the Orange Basin of Namibia, and further proven by the Brulpadda and Luiperd discoveries in South Africa’s Outeniqua Basin. Impact believes that all of these areas share common world-class Cretaceous source rocks and similar giant stratigraphic traps. It is expecting higher quality Cretaceous reservoir sands in Area 2 than those currently explored in the SANAM super-basin.

Siraj Ahmed, CEO of Impact Oil & Gas, said, “We are pleased to have concluded this agreement with Silver Wave Energy and thank the Silver Wave team for their collaboration over the past four years. As the holder of 100% of this high-calibre exploration block, we are particularly excited with the opportunity for this area to contain a very similar play to that which has brought Impact so much success in the Namibian Orange Basin.”

Following completion of this transaction, Impact will hold 100% participating interest and operatorship in Area 2. In the adjacent Transkei & Algoa blocks Impact holds a 45% participating interest and BG International Limited, a wholly owned subsidiary of Royal Dutch Shell plc, holds a 55% participating interest and Operatorship. 

The Petroleum Agency of South Africa (PASA) has been particularly active since 2022 for the promotion and optimal development of on- and offshore oil and gas resources on behalf of the government, seeking geophysical contractors to acquire fresh seismic data in the Orange, Bredasdorp, Durban and Karoo basins.

DeepSea Mira contract extended. (Image source: Adobe Stock)

Northern Ocean Ltd has announced an extension of the contract with a subsidiary of TotalEnergies SE for continued work in Africa using the Deepsea Mira

The firm term of the contract is extended from October 2024 for one well and provides one additional well option. The extension from October provides firm revenue backlog of approximately US$24.3-34.2mn with the option to extend for an additional well potentially adding a further backlog of approximately US$26.9-36.9mn.