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Welcome to our 128th issue of NOGintelligence.
Do remember you can now get your message across to the wider oil and gas-connected public is by advertising in our fortnightly 4-page pull out in the Guardian. Contact us urgently to secure your position. We have only limited availability and once it's gone, it's gone!
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Seplat Secures Return of $368 Million from Escrow
Seplat shares on the London Stock Exchange (LSE) have soared with the news that the dually listed (LSE and NSE) company has been able to secure access to $368 million previously held in escrow. Seplat has been in talks over a potential acquisition in the Niger Delta. The company, through its wholly owned subsidiary, Newton Energy, is part of a consortium that is in talks with the vendor over terms for the acquisition of the "large" asset. Talks had stalled with the drastic drop in oil prices but discussions have now been re-opened towards reaching a deal.
Seplat has not revealed details of the other members of its consortium or the vendor, citing confidentiality obligations. However, there is speculation that acquisition is from one of the majors (referred to locally as IOCs) and that is it a large ticket asset.
The company had previously set up an escrow account to the tune of $453 million in connection with the potential acquisition. This was a refundable deposit against the asset. However, due to delays in closing the deal, Seplat has been able to negotiate a return of $408 million, whilst the remaining $45 million remains as a deposit with the vendors whilst negotiations continue.
A further $29 million has been placed into a new escrow account against the deal, leaving Seplat with $368 million cash from the total amount originally in escrow. The funds will be released back to Newton should an agreement be reached in the potential acquisition. However, it will cost Newton $20 million to withdraw from the deal at this advanced stage. That sum will have to be paid to the other consortium members if it should withdraw.
Seplat has always been Nigeria focused and has been on an acquisition drive even before its spectacular dual listing. It acquired a 45 percent participating interest in a portfolio of three onshore producing oil mining leases (OMLs) 4, 38 and 41, which include the producing Oben, Ovhor, Sapele, Okporhuru, Amukpe and Orogho fields. Seplat says it has more than tripled production from these OMLs on which it is operator.
Three years later, in 2013, the company acquired a 40 per cent participating interest in the Umuseti/Igbuku marginal field area within OPL 283 from Pillar Oil using their subsidiary, Newton Energy.
Two years later, the company, which says it is pursuing a Nigeria focused growth strategy, was on the prowl for more assets to satisfy their burgeoning coffers. They acquired a 40 per cent interest in OML 53 and a 22.5 per cent interest in OML 55 from Chevron. This acquisition was however not plain sailing, as, in spite of having obtained Ministerial Consent to the acquisition, Brittania-U is in court claiming that it won the bid and urging the Nigerian courts to order the transfer of the assets to it. Many expect that a settlement will be reached with Brittania-U on the matter.
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OPEC Daily Basket Price Stood at $53.79 a Barrel Monday, 20 July 2015
The price of OPEC basket of twelve crudes stood at $53.79 a barrel on Monday, compared with $53.99 the previous Friday, according to OPEC Secretariat calculations.
The OPEC daily basket price has been on a downward trend since the beginning of July. There are now fears that the lifting of sanctions on Iran, now in sight, could push prices down again. Market analysts say that Iran is hoarding over 50 million barrels of oil on super tankers in the Persian Gulf in expectation of the lifting of sanctions. If all of that oil hits the market at the same time it could drive oil prices down sharply. Iran has reached agreement with some of the world major powers on the lifting of sanctions in return for limiting nuclear activity.
In addition to the general market issue, the entry into the market of the Iranian oil is likely to have a direct impact on Nigeria. Much of that oil is expected to go head to head with Nigerian crude, which is already struggling to find buyers. India and Indonesia, Nigeria's largest buyers are likely to be the targets for the Iranian crude, which could force Nigeria into giving steep discounts for its crude especially given the added costs for Asian buyers due to the distance for Nigerian deliveries.
The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine(Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).
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Afren Suspends Trading in its Shares
London Stock Exchange listed Afren's fall from grace seems complete after it announced the suspension of trading on its shares on the 15th of July 2015. London Stock Exchange listed Afren said that it had become clear that the level of near-term production was going to be lower than what it had expected when it announced the proposed restructuring in March.
Afren said it would be engaging further with its Ad Hoc Committee of bondholders regarding its request for an additional US$30 million and with other stakeholders to discuss the potential implications on the proposed restructuring.
The former African success story said that it was currently unable to accurately assess its financial position and therefore had no option but to request the suspension of trading in its shares. Afren said it would provide a further update to the market as soon as possible.
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MX Oil to Invest in OML 113's Aje Field
AIM quoted oil and gas investment company, MX Oil has reached agreement with Austrialian company, Jacka Resources, to invest in an indirect, non-operated, 5% revenue interest in the OML 113 licence, offshore Nigeria, which includes the Aje Field. The interest in OML 113 is held by ASX listed Jacka through wholly owned subsidiaries.
The field is at a substantial development stage project with proven, flow-tested discoveries where production is expected by January 2016. Initial targeted peak production is 11,000 barrels of oil per day (bodpd), rising to 19,000 bopd in Phase 2. The company said this investment was in line with its strategy to acquire high impact near term production assets in proven oil and gas jurisdictions to build a cash generative platform.
The 5% interest is valued at US$55.1 million NPV (0) or US$31.5 million NPV (10) based on a recently completed CPR assuming US$70 oil price. MX Oil is expecting to raise $11.5 million of additional funds to cover the capital expenditure to get to first oil. They expect to finance this by way of a non-dilutive debt facility. The company also expects to do a further fund raise for Phase 2 and Phase 3 will require additional investment, much of which is anticipated to come from revenue from oil sales.
In addition, the company announced the issue of 133,333,333 new ordinary shares via a placing at 4.5p per share to raise £6 million before expenses to provide additional working capital and funding for future capital expenditure and investment.
MX Oil's Chief Executive Officer Stefan Olivier said, "This is a game-changing acquisition for MX Oil. It accelerates our transformation into a highly cash generative oil and gas investment company."
"Alongside expected production in Nigeria by January 2016, the next six months promise a great deal of news flow which should excite our shareholders, as we look to create a leading oil and gas company."
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NNPC GMD, GEDs Remain in Office After Dissolution of Board
In our last edition we reported the dissolution of the Nigerian National Petroleum Corporation Board (NNPC) Board. Whilst the Board has been dissolved, the NNPC Group Managing Director's (GMD) office and the eight directorates are still in place. That means that the GMD, Dr Joseph Dawha who was appointed by former Petroleum Minister, Alison Madueke, and the Group Executive Directors (GED) who head up the Directorates remain in office.
The Directorates are: Exploration & Production (no GED has been appointed following the sacking of Abiye Membere by Alison Madueke), Refineries & Petrochemical (Ian Udoh), Engineering and Technical (Adebayo Ibirogba), Gas & Power (David Ige), Commerce & Investment (Aisha Abdurrahman), Corporate Services (Dan Efebo), Finance & Accounts (Bernard Otti) and Business Development (Attahir Yusuf).
NNPC Divisions are headed by Group General Managers while its ten subsidiary companies are headed by Managing Directors. NNPC also has two partly owned subsidiaries and 16 associated companies.
President Buhari is largely expected to embark on a complete restructuring of NNPC after years of allegations of corruption.
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Bell Oil & Gas Commissions Spooling Facility
The growth of Nigerian capability in the oil and gas industry has just received a boost with Bell Oil and Gas' commissioning of its spooling facility in Port Harcourt. The $4 million facility, said to be the first of its kind in Africa, will manufacture pipes with diverse bends and angles, as well as delivering liquids to various outlets at different temperatures and pressures. The Glassfibre Reinforced Epoxy (GRE) pipes spooling facility was commissioned by the Executive Secretary, of Nigerian Content Development and Monitoring Board (NCDMB), Mr. Denzil Kentebe.
Speaking at the event, Kentebe commended Bell Oil & Gas for the investment, which came on the back of the Board's Nigerian Content Equipment Component Manufacturing and Certification (NCEC) program commenced under the leadership of the pioneer Executive Secretary, Dr. Ernest Nwapa. He described the NCEC initiative as laudable, pledging that the Board under his leadership will continue to implement the framework and other programs geared towards encouraging investments and establishment of facilities in Nigeria.
In his welcome address, the Managing Director of Bell Oil & Gas, Mr. Kayode Thomas explained that the company blazed the trail in the installation of GRE pipes in Nigeria since 2004 on Bonga floating production, storage and offloading platform.
He announced plans by the company to take on complex projects, become certified to train and certify other trainers and make Nigeria the West African hub for GRE pipes.
Thomas said that the company had in the last one year fabricated a substantial quantity of the spools used on Total's Ofon 2 project as well as Chevron's Domestic Supply Obligation and had got various spooling contracts from Subsea7, Nigerdock, Pontecelli, and Hyundai Heavy Industries (HHI).
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Eni Niger Delta Oil Pipeline Blast Kills 12
Eni has confirmed the death of 12 members of the maintenance team of a local service company after an explosion at the site of the repair works of the Tebidaba-Clough Creek line, an oil pipeline in the onshore Niger Delta. The company said the pipeline was being repaired after previously being damaged by acts of sabotage. 3 others were injured in the explosion, one of them severely burnt.
The Italian multi national said it was investigating the incident together with the local authorities. Later, ENI said its first conclusions were that it appeared likely that the same people who previously tried to obtain crude oil illegally from the pipeline triggered the fire. The company said in a statement that local witnesses reported seeing saboteurs, upon arrival of the intervention team to repair the pipeline, at the point of theft of the oil where the same saboteurs had installed a specific valve.
The company said it wished to express its deepest condolences to the families involved in this tragic accident. The CEO of Eni, Claudio Descalzi, said: "All of Eni rallies around their colleagues in Nigeria and the families of those who lost their lives in this tragic event. Sorrow for the loss of so many lives is now compounded by dismay and upset at the details of events that are now emerging regarding the incident. We reiterate our determination to shed full light on the matter, in close cooperation with local authorities."
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| CORPORATE SOCIAL RESPONSIBILITY |
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Robert Gordon University Launches Oil and Gas Institute in Nigeria
Aberdeen based Robert Gordon University (RGU) has launched its Oil and Gas Institute in Nigeria. The new Nigerian based Oil and Gas Institute has been made possible by a £3.6 million donation from The Wood Foundation, a philanthropic foundation set up by Sir Ian Wood, as well as a further £4.1 million of funding from RGU.
The RGU Oil and Gas Institute is designed to provide a one-stop shop for industry and other stakeholders to access RGU's oil and gas expertise, with four main areas of focus: drilling and wells excellence; operations excellence; decommissioning excellence; and business excellence.
At the press briefing for the launch Director of RGU's Oil and Gas Institute, Professor Paul de Leeuw, described the key priorities for the new Institute. He said: "RGU is committed to building on our strong links with Nigeria, which represents the university's largest international student population, particularly as the country looks to develop the next generation of oil and gas professionals to explore its significant deep water potential.
"Oil and gas will continue to play a key role in meeting our primary energy needs and will do so for decades to come.
"Most of this demand will be met from oil and gas reservoirs currently not on stream yet, such as deep water Nigeria, and a whole spectrum of professionals - from lawyers to engineers, computer specialists to industry leaders - will be required to make the most of this potential."
Also commenting on the establishment of RGU's new Oil and Gas Institute was Chris Maskell, the Director of UK Trade & Investment in Nigeria who said: "UKTI enthusiastically supports RGU's new Oil and Gas Institute and sees it as an important enabler to deepen the relationship between Nigeria and the UK".
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SPDC - Provision of Corporate Radio Maintenance Contract
Shell Nigeria Exploration and Production Company Limited (SNEPCO) invites interested and registered Nigerian companies to respond to the opportunity for the provision of radio maintenance services. The proposed contract will commence in the 1st quarter of 2016. The scope of services involves the provision of corrective and preventive maintenance of diverse radio transmission systems, multiplex systems, power supply systems, CATV systems, emergency shutdown (ESD) systems, aviation warning light systems on mast/towers, tower rigging activities and any other telecommunications systems repairs and maintenance. Only tenderers who are registered in the 3.11.20-telecommunication installation/support services NJQS product/category (A-D) shall be invited to submit technical bids. The closing date for this opportunity is 22nd July 2015.
Total - Provision of Emergency and Fire Safety Team Management Services
Total Exploration and Production Nigeria Limited (TEPNG) invites interested and registered Nigerian companies to respond to the opportunity for the provision of emergency and fire safety team management services. The scope of services involves the provision of safety and fire safety services; co-ordinate, support and actively participate in safety and fire prevention within the frame of an emergency and/or crisis management and plans during drills, exercises or real incident response operations. fire, rescue and escape equipment inspection, and planned routine maintenance as and where required emergency response intervention team (24/7 response) - shift team emergency role training, HSE induction and drill exercises permanently man the safety & fire prevention office / control room / fire panel room administration of relevant documentation, i.e. logs, emergency procedures, training materials, emergency signage, etc. Only Tenderers who are registered in the relevant Product/service Category in the NipeX Joint Qualification Scheme (NJQS) database shall be invited to submit technical bids. The closing date for this opportunity is 30th July 2015.
Mobil - Provision of Desludging and Cleaning of Hydrocarbon Tanks Services
Mobil Producing Nigeria Unlimited (MPN) invites interested and registered Nigerian companies to respond to the opportunity for the provision of desludging and cleaning of hydrocarbon tanks. The Contract is expected to commence in the second quarter of 2016. The scope of services involves desludging and cleaning of hydrocarbon tanks in MPN facilities on call out basis. Only tenderers who are registered with the relevant NJQS Product/Category shall be invited to submit technical bids. The closing date for this opportunity is 31st July 2015.
ADDAX - Provision of Combined Insurance Services
Addax Petroleum Development (Nigeria) Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of insurance services. The scope of services involves provision of insurance services (group life assurance, marine, motor vehicle and industrial all risk) associated with all company operations. Only Tenderers who are registered with the relevant NJQS product category shall be invited to submit technical bids. The closing date for this opportunity is 7th August 2015.
SPDC - Provision of Shallow Offshore Analogue Survey and Positioning Services
Shell Nigeria Exploration and Production Company Limited (SNEPCO) invites interested and registered Nigerian companies to respond to the opportunity for the provision of shallow offshore analogue survey and positioning services. The scope of services involves the provision of analogue detailed bathymetry and debris detection surveys, acoustic pipeline inspection surveys, rig positioning services, new technologies, reporting, positioning and navigation and other miscellaneous survey services. Only Tenderers who are registered in the NJQS product/service category 3.10.03 site survey services &/or 3.09.04 geophysical & hydrographic site survey services shall be invited to submit technical bids. The closing date for this opportunity is 7th August 2015.
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Remi Aiyela
Editor-in-Chief
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