This article does add some weight to what you were saying KOKO. This article makes it sounds like the JV knew the size of the resource they had discovered, before they reported. The news coming out of Kenya is making this gas discovery sound really insignificant. These companies need to release the definitive results on the well and some clarification statements. I hope that the failure by the JV partners to seek government clearance does not lead to punishment for non-compliance.
Gas explorers jump the gun in making public their findings
By PAUL WAFULA [email protected] Posted Monday, September 17 2012 at 19:00 IN SUMMARY
According to a senior government official who attended a meeting in which the Ministry of Energy put to task representatives of the exploration firms, except the operator of the well in which some 52 metres of net pay dry gas was found, the three companies in the joint venture broke the law Apache Corporation, however, the operator of the well in which gas was found last week maintains that it followed the laid down procedures in announcing the find in the deep sea off the coast of Malindi Though each country has its own set of rules and regulations on reporting methods, it is understood that Kenya’s exploration contracts requires that such announcements must come after government clearance It is not clear why the firms went ahead to excite the markets even when they knew the find was not commercially viable but sources indicate that the announcement may have been informed by the need to drive up their share prices in the respective countries they trade Hopes of Kenya being a gas exporter were last week raised and crushed in under 24 hours, even as focus now shifts to why the exploration companies not only went against government regulations in making the find public, but also announced half-truths.
According to a senior government official who attended a meeting in which the Ministry of Energy put to task representatives of the exploration firms, except the operator of the well in which some 52 metres of net pay dry gas was found, the three companies in the joint venture broke the law.
“The small operators infringed on the law requiring that they wait until the government is officially briefed before making the announcement,” a senior ministry official who deals with licensing exploration companies said in an interview.
Apache Corporation, however, the operator of the well in which gas was found last week maintains that it followed the laid down procedures in announcing the find in the deep sea off the coast of Malindi.
In an email interview from Houston, US, Apache allayed fears that it had gone against the government to announce the oil find 52 net of natural gas pay.
“We understand our work there is very important to Kenya. Apache closely follows all rules and regulations wherever we operate, including in Kenya,” said Mr John Roper, Apache’s spokesman.
Though each country has its own set of rules and regulations on reporting methods, it is understood that Kenya’s exploration contracts requires that such announcements must come after government clearance.
“The operator of the well was a bit more cautious because we deal with him on a daily basis and we receive daily reports. But they should have waited until the government made the announcement because that is what the contract we signed with them states,” the official said.
On Monday last week, Apache together with four exploration firms, that are in the L8 Joint venture on the well, separately announced they had found natural gas, to the excitement of their international markets.
But the gas find was a day later dismissed as insufficient to be commercially viable by government officials who were not let to be the first to make the find public.
The four firms are Apache Corp which owns 50 per cent of the well, Origin Energy Limited (20 per cent), Pancontinental Oil & Gas NL (15 per cent) while the remaining 15 per cent is owned by Tullow Kenya B.V., the firm behind the Turkana oil find in March.
It is not clear why the firms went ahead to excite the markets even when they knew the find was not commercially viable but sources indicate that the announcement may have been informed by the need to drive up their share prices in the respective countries they trade in order to recoup part of their investment given that exploration is capital intensive move.
“We think the announcement by the small companies was just to make the shares grow,” a Ministry of Energy official said.
Immediately after the news went out, their share prices shot up significantly. For instance, the shares of first firm which went out with the news, Pancontinental Oil grew by the biggest margin in the last two decades. Bloomberg shows that Pancontinental shares increased by as much as 70 per cent.
(20min delay)