sentiment , page-22

I tend to agree Supermajor.

I have only just got around to listening to the conference call, I assume the one on their website is the UK one not the US one based on the accents!!

It all sounded fairly good, clearly the primary obective of this drilling programme was to ensure that 2C were converted to 2C. Having heard that they have identified another potential reservoir below the Chouette prospect, that it sounds like the Transocean Monitor is not suitable to drill it. Whilst they left it sufficiently open to allow them to still drill this well after Gazelle P-4, it certainly sounds as if they would prefer to drill Chouette with the Sapphire Driller. They did suggest they were looking at potentially drilling another pre-development well at Gazelle. If this is shallower than Chouette then it should be cheaper on capex and therefore fit better within the current cash position of the company. If they were to do this, the likelihood of converting into 2P grows. It would also mean that they are more likely to achieve the timeline as stated to the Ivory Coast of first production in Q1 2014. I would expect either P4 or a potential P5 to be suspended in the LC2 being as Jeff Shrull stated this was where 45% of the gas resources in Gazelle are held (especially being as he hinted at a resource upgrade for the LC2).

It sounds as if they see the Sapphire Driller programme will be predominantly an exploration programme with a bit of appraisal at Bubale, Hippo and Condor (they did mention that they see this as a discovery).

Possum Belly, you are right, Afren got the RBL facility in a better economic time (2006-07) but I have seen other oil companies manage to access RBL facilities in these difficult markets. It depends on their contacts within the city and what interest rate they are willing to pay. Afren did also manage to access an RBL facility in Ebok during 2009, which they got $450m at 4-5.5% above LIBOR. I certainly wouldn't expect RIA to need this volume of cash, but they could look for $150m-$200m probably at a similar or marginally higher interest cost. Remember that the gas sale agreement will help to access finance as its essentially a contract note for the sale hence reduces the investment risk of the bank (especially if they have 3 pre-development wells drilled).

Afrens okoro facility was arranged at $200m (albeit in 2007) when the company were worth circa $150m based on 2P reserves of 32m barrels of oil. The current resource estimate (the mean) for Gazelle works out at around 38m boe.

I think RIA could achieve something similar, though maybe a touch more expensive, on the back of FID for Gazelle and conversion of 2C to 2P, which would pay for the vast majority of the 2nd stage of drilling in 2013 and development of the remainder of the Gazelle field.

What was excellent to hear, were the tie in benefits of any additional gas wells, there is clear demand within CIV to absorb further gas production, which is great news so that 100mcf / day is merely just a base case.

Excellent news and great for quick tie back of additional fields. Whilst capex will be expensive upfront, the payback on these additional wells will be very quick and generate a great ROCE.