The FT Nigeria Oil and Gas Report 2013 is scheduled to come out on Monday 6th of May and will be distributed at OTC and to the Nigerian exhibitors there.

To find out about advertising opportunities  contact Mr Toke Ibru:

tokeibru@hotmail.com  

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 Afren To Become Majority Shareholder in First Hydrocarbon Nigeria

Afren Plc has announced that it will acquire an additional interest in oil mining lease (OML) 26 from First Hydrocarbon Nigeria (FHN) through a third party put option. The company said that, subject to shareholder approval, it would get an additional 10.4 per cent of FHN's shares, equivalent to15 million shares, giving Afren a majority interest of 54.8 per cent interest in FHN. Afren will pay US$37.05 million for the shares under the terms of the put option, payable in cash.

First Hydrocarbon Nigeria (FHN) acquired a 45 per cent interest in OML 26, onshore Nigeria, on 01 December 2011 from the Shell Petroleum Development Company of Nigeria Ltd (SPDC), joint venture with Total E&P Nigeria Ltd (Total) and Nigeria Agip Oil Company (Agip). FHN was able to secure finance of US$280 enabling it to complete the acquisition and its share of future capital requirements associated with the initial development of the block.  

The gross average gross average production on the block from its Ogini and Isoko fields totalled 6,010 barrels of oil per day (bopd). Production came in below expectation during the period owing to gas-lift compressor outage and maintenance and repair work on the SPDC operated Trans Forcados Trunkline during the first half of 2012. Full gas compression was restored by the end of June 2012, following which increased production to 10,500 bopd.  

An independent assessment of the reserve and contingent resource potential of the Ogini and Isoko fields for FHN in March 2013, has estimated the gross remaining 2P oil reserves at the fields at 134.6 million barrels and gross contingent resources at 68.0 million barrels (gross 2P & 2C reserves and resources 202.6 million barrels; 91.2 million barrels net to FHN). This represents a 231% increase on 2P reserves previously carried by FHN and a 10% increase on previously carried 2P & 2C volumes as at 31 December 2011.  

In addition, significant upside potential of 144 mmboe also exists within the undeveloped Aboh, Ovo and Ozoro discoveries, together with an estimated 615 mmboe gross unrisked prospective resources defined across multiple prospects that will continue to be worked up in parallel to, and integrated with, future development plans.

The proposed forward work programme consists of the drilling of new horizontal wells in 2013.

Mira Resources, the owners of a 48 per cent interest in marginal field, Tom Shot Bank (TSB) in oil mining lease (OML) 14 have confirmed that they are finally planning to take the field to production. The Board of Directors has also decided that neither Mira nor its assets are for sale and that the process commenced with First Energy Capital to investigate strategic alternatives has been halted.

CEO and Director, Johnathan More, said: "We are very pleased to commence the immediate development of the TSB Field to production. Mira has a fantastic asset with over 22 MMBO in independently verified 2P Resources and additional resource upside potential. We are excited to continue working with our Nigerian partners, Associated Oil and Gas Services Limited and Dansaki Petroleum Limited, on a great opportunity to develop the Tom Shot Bank Field and to achieve initial production and cash flow in the near term."

The company said its next step would be to raise $5 million by way of a non-brokered private placement of 100,000,000 units at $0.05 per unit. Each unit will consist of one common share and one full warrant to purchase one additional common share at $0.10 per share for a period of two years. The company said that it could be done through management financing. The private placement is not expected to result in a change of control of Mira and is subject to approval of the TSX Venture Exchange on which Mira is listed.

President and Director of the company, Tom Cavenagh has handed in his resignation. The company is building what is describes as "a world class management team with decades of Nigerian oil production experience" to assist in evolving Tom Shot Bank Field into a producing asset.

OML 14 was originally held by Shell before the block was designated a marginal field and Tom Shot Bank was awarded in the 2003 marginal fields round to Associated Oil & Gas (51% & Operator) and Dansaki Petroleum (49%). Associated Oil and Gas was designated the operator of the field.  

The 25 square kilometre block, which is situated water depths of between 5 and 15m, is covered by 3D seismic, which was reprocessed in 2008. Two wells were drilled by Shell in 1980 and 1989. The first well reported 83 net feet of proven oil pay and was suspended. The second well was plugged before Shell relinquished the block.

Gross contingent resources-contingent subject to re-drilling verification of 8.7 million barrels of oil have been assigned to this discovery, with prospective resources already show the potential for more than 110 million barrels.  

Mira bought into the block in November 2010, acquiring a 48 per cent equity interest with a 54 per cent economic interest. Mira has paid $1.8mm in past costs of which $1.5mm is cost recoverable. They are responsible for 100 per cent of capital and operating expenditures, which are recoverable at 125 per cent through production.

Oryx Petroleum Corporation Limited has filed a preliminary prospectus with the securities regulatory authorities in each of provinces of Canada, other than Quebec, in connection with a proposed initial public offering of common shares. The IPO is being underwritten RBC Capital Markets, Barclays Capital Canada Inc. and Merrill Lynch Canada Inc.

Oryx which is focused on Africa and the Middle East has assets in Nigeria, Senegal, Guinea Bissau, Congo (Brazzaville) and Iraq. It was founded in 2010 and is a subsidiary of the Addax and Oryx Group Limited (AOG), which was incorporated in 1987. Founder of AOG, Jean Claude Gandur, was the founder of Addax Petroleum, which he sold to Chinese state-owned Sinopec in 2009 for a reported $9.8 billion. Oryx is his attempt to build a new Addax Petroleum and it is made up of key members of the former senior management team of Addax.

The company said: "AOG's upstream division, Oryx Petroleum, has filed a preliminary prospectus with the securities authorities in Canada, as the first step in the process of preparing for an initial public offering on the Toronto Stock exchange."

In spite of its acquisitions, Oryx is yet to reach first oil on any of its assets. The IPO will enable it to accelerate work on its assets. It plans to invest $400 million over the next four or five years and plans to spend $325 million on exploration in 2013 alone.  

Oryx has a 38.67 per cent participating interest in the 1400 square kilometre oil mining lease (OML) 141 after farming into the block in 2011.  

Emerald and Oryx had been looking to partially divest their interests but it seems that with the IPO, Oryx will now be able to finance the development of the block and retain all of its equity. The company will go into the IPO with no debt.

There is strong indication that Oando Plc may have completed its acquisition of ConocoPhillips' entire oil and gas assets in Nigeria with the payment of $1.3 billion from the proceeds of the recently concluded Rights Issue.

The company had already made an initial $435 million deposit for the transaction while a syndicate of international banks was lined up to finance the $800 million debt portion of the transaction. With this development, the company is now on the threshold of increasing its oil production to almost 50,000 barrels of oil per day. 

The integrated energy firm had issued 4.548 billion shares to existing shareholders at N12 per share to raise N54.6 billion between December 2012 and February 2013. The company realised about N62 billion from the Rights Issue, indicating an over-subscription of N8 billion or 14 per cent, according to source close to the regulators.

When contacted by phone, Olumide Orojimi and Meka Olowola of the Communications Department of the company could not be reached for further confirmation. But an analyst who spoke on the development but craved anonymity said he believed stakeholders must have responded to a positive outlook based on strong market fundamentals.

"Oando is entering a new frontier in its integrated energy business model which will see the company increase investments in the upstream segment of the oil & gas space," he said.   

"Oando is a low cost route into Nigeria's attractive energy sector," he added.

Although some have criticised the purchase saying Oando's bid was too high, yet others have said that Oando Plc has made an investment in the high margin upstream division that will transform the business significantly and increase value creation for the shareholders. It also extends its footprint into the liquefied natural gas (LNG), as well as power generation.

Earlier the Group Chief Executive, Oando Plc, Mr. Wale Tinubu, was quoted to have declined comment on how much would be raised from the public offering saying the allotment had to be completed and approved by the regulators before any public communication could be made.

He, however, said: "We thank our shareholders, for the immense support we received during the acceptance period of our Rights Issue exercise. We are truly humbled by the level of participation from them as well as the new investors who acquired Oando Plc's shares through traded rights on the Nigerian Stock Exchange (NSE). The fresh capital will be deployed to actualise our corporate strategy for improved earnings through higher margin upstream businesses and increased value creation by reduction in our cost of capital".

According to Mr. Tinubu, Oando looks forward to the successful conclusion of the Rights Issue exercise, which will pave the way for a revitalised company, strongly positioned for diversified growth.

OPEC Daily Basket Price Stood At $106.80 A Barrel Wednesday 03 April 

The price of OPEC basket of twelve crudes fell sharply to $106.80  a barrel on Wednesday, compared with $108.16 the previous day, according to OPEC Secretariat calculations but virtually unchanged from the price last week Wednesday.

Nigeria's Crude Oil Loading Programme Reviewed For April   

Scheduled plans for crude shipments for the month of April may have been revised by the Federal Government as three Bonny light cargoes, two lots of Brass River and one Okono consignment have been deferred to next month thus making the final figure a total of 66 shipments for the month of April.

Information obtained by NOGintelligence reveals that the country planned to ship 11 consignments of Qua Iboe, nine of Forcados, eight each of Bonny Light and Agbami, five each of Akpo, Bonga and Brass River, four of Erha, three each of Anenam, Escravos,Usan and Yoho, two lots of Abo, Antan and Okwori, and each of EA Blend,Okono and Pennington in the month of April.

In view of this development, the Federal Government, according to the final loading programme for the month of May is increasing crude oil exports to 76 cargoes, to accommodate this month's shortfall. The May programme totals 65 million barrels, or 2.1 million barrels a day, as against 60.2 million, or two million a day scheduled for April.

Loading programmes are monthly schedules of crude shipments compiled by field operators to allow buyers and sellers to plan their supply and trading activities. Industry analysts say the drop in the number of shipments for the month may not be unconnected to the rising case of oil theft, which prompted oil companies to declare force majeure on their crude exports. This growing menace has led to the loss of up to 150,000 barrels of oil daily according to some reports.

Royal Dutch Shell Plc just lifted a two-week force majeure on Bonny Light exports on March 19 while its Nembe Creek Trunk line which was attacked by oil vandals will now close in April to clear points along the link that are vulnerable to thieves.

Similarly, Agip Oil, on Monday, announced the suspension of its operations in Bayelsa State because of the high level crude oil theft perpetuated by vandals across its installations in the state.

Meanwhile, the Nigerian National Petroleum Corporation has said it is working out measures to boost the exploration and export of crude, despite the massive oil theft going on in the sector.

"The NNPC has been working on boosting crude export and the Group Managing Director sees this as very important," said the General Manager, Media Relations Department, Group Public Affairs Division, NNPC, Mr. Omar Ibrahim.

International Oil Companies (IOCs) operating in Nigeria have restated their opposition to the Petroleum Industry Bill (PIB), warning the promoters of the reform bill that $66billion investments in the deepwater would be in jeopardy if the bill is passed into law.

In a document circulated in Lagos, which was obtained by NOGintelligence, the operating companies, comprising Shell, ExxonMobil, Chevron, Agip and Total argued that the fiscal terms in the proposed reform bill would be harsher than the current fiscal regime in the rest of the world.  

They said the fiscal terms proposed by the PIB would make all planned deepwater projects non-viable, resulting in the quick decline of deepwater production in the country.

Citing statistics released by Wood Mackenzie, the companies argue that the Federal Government take for Production Sharing Contracts (PSCs) in Nigeria during post-PIB would not be globally competitive.

Comparing Nigeria's take as a percentage of the net revenue with the world-wide government take, Wood Mackenzie's data showed that Trinidad takes 58 per cent; Angola, 62 per cent; Nigeria, 70per cent; Equatorial Guinea, 75 per cent; Egypt, 79 per cent; Malaysia, 85 per cent; Indonesia, 87 per cent and Nigeria, under the PIB, 96 per cent.

Onshore, the firms said the PIB would also make the fiscal terms globally uncompetitive, putting investments at risk. Citing the same source, the oil companies stated that government's take in Equatorial Guinea's onshore/shallow water is 44 per cent; Ghana, 52 per cent; United States Concession, 55 per cent; Kazakhstan, 61 per cent and Russia, 65 per cent.

United Kingdom, the data reveals, collects 68 per cent; Trinidad, 73 per cent; United Arab Emirate, 77 per cent; Norway, 80 per cent; Venezuela, 82 per cent; Angola, 83 per cent; and Oman, 85 per cent.

Under the current fiscal terms, the Nigerian government, the data reveals, collects 90 per cent but the PIB proposes 92 per cent, while Libya currently collects 97 per cent of net revenue from onshore/shallow water operations.

Currently, Nigeria has a royalty rate of 0 to eight per cent, a tax rate of 50 per cent and 20 to 60 per cent is the Federal Government's share of profit oil, with incentives of $1.38 per barrel of oil equivalent as incentives to the oil companies.

According to Wood Mackenzie, the PIB hiked the figures to between 18 and 26 per cent royalties; 55 per cent tax rate and 20 to 75 per cent of government's share of profit oil, with only $0.34 per barrel of oil equivalent as incentives to the oil producers.

The oil companies pointed out that Angola collects 0 per cent royalty; 50 per cent tax and between 25 and 80 per cent government share of profit oil, with $1.84 as incentives to the oil firms.

Indonesia is also more competitive than Nigeria as the country collects 10 per cent royalty; 30 per cent tax; between 46 and 73per cent profit oil and gives $0.38 incentives.  Brunei, according to the oil firms, collects eight per cent royalty; 55 per cent tax rate, between 14 and 50 per cent profit oil but gives no incentives.

Equatorial Guinea, the companies reveal, collects between 12 to 16 per cent royalty; 35 per cent tax, between 10 and 60 per cent profit oil and also gives no incentives.

Nigerian Rig Fire, Others Force Chevron to Cut CEO's Pay

The Federal Government's oil production assumption of 2.53 million barrels of oil per day (bpd) is gradually looking overly optimistic as the latest onslaught on oil installations, consequent shortfalls in production targets and force majeure declarations by the oil companies are beginning to take their toll.

If last year's average production of 2.36 million bpd against a production target of 2.48 million bpd is anything to go by, the country looks even less likely to meet the increased forecast.

With oil making up for 15 per cent of the nation's Gross Domestic Product (GDP), two-third of Federal Government's revenue and over 95 per cent of export earnings, the risk to oil output is bound to have material implications for the Nigerian economy. The nation's budget figures for the year are likely to be affected which could set growth projections back.

For instance, a recent report has indicated that the 'force majeure' declarations by oil companies in the first quarter of the year due to an increase in oil theft were sufficient to cause a downward adjustment of their oil production projections.

"Floods in the fourth quarter of 2012 and a pick-up in oil theft in the first quarter of 2013 compelled us to revise our projections. We downwardly adjusted our oil production projection to 2.30m bpd, from 2.45m bpd, owing to the increase in oil theft. This implies that the growth projection of 6.9 per cent to seven per cent in 2013 is more likely, than our initial 7.1 per cent forecast," the report said.

Bex Nwaudu, a director at CBO Capital who spoke to NOGintelligence on the issue said that the current situation calls for great caution from the government considering the fact that the twin issues of oil production targets and oil price both have a huge effect on the budget target. He said that the "formulated" oil price by the International Monetary Fund (IMF) is bound to have a greater impact on what the country's effective oil price would be.

With the recent development, the government, according to the report, may no longer be able to meet its 2013 budget target at the current budget assumption but at a higher effective budget oil price.

"The lower-than-targeted oil production - 2.53m bpd as against 2.3m bpd now implies that for government to meet its budget revenue target of N3.9 trillion, the effective budget oil price would be $87 per barrel, higher than the current budget assumption of $79per barrel," he said.

"This effective price though is still lower than the actual oil price of $114per barrel in first quarter of 2013, which implies that some oil proceeds will still be directed towards the excess crude account, but less than initially projected," he added.

Heritage Oil Shares Fall After Arbitration Ruling Over Sale of Ugandan Assets

Legal Groups Oppose Death Penalty for Oil Pipeline Vandalism

Oil Companies Worried As MEND Threatens To Renew Attacks

House of Reps Reviewing Shell $11.5b Oil Spill Fine

NIMASA Implements Oil Installations, Wells Levy

Monrovia, Liberia

9 - 11 April

www.africabusiness.com 

Nigeria Integrated Oil Spill Summit

Uyo, Nigeria

10 - 12 April

www.nosdra.gov.ng

Global Oil & Gas Crisis Management & Emergency Response

Barcelona, Spain 

11 - 12 April

www.3dent-media.com

2ND Africa East Africa Oil & Gas Summit

Nairobi, Kenya

18 - 19 April

www.expogr.com/kenyaoil 

21st Annual Middle East Petroleum & Gas Conference

Abu Dhabi, United Arab Emirates,

21 - 23 April

www.cconnection.org

19th Western Africa Oil/Gas & Energy Conference

Windhoek, Namibia

22 April

www.pr-inside.com

Oil & Gas Libya Exhibition & Conference

Tripoli, Libya

22 - 25 April

www.oilandgaslibya.com