civ ci-202 / ci-01 - afren

I am also invested in Afren (heavier than RIA) and was doing a bit of research on them today - just a quick look through their website as I do every so often to see whats been updated.

Today I noticed their CIV page had been changed at the end of March. http://www.afren.com/operations/cote_divoire/block_ci01/

The statement that is key to RIA is towards the bottom.

"Outlook
We are carrying out detailed subsurface work and have defined multiple prospects and leads as we aim to establish the optimal location for a well to test the new Cretaceous interpretation. We are also looking at acquiring more 3D seismic over the block. In addition, we are evaluating other techniques such as electromagnetic surveying to aid our understanding of these complex depositional systems. In order to expedite the appraisal and development of the block in the most efficient way we are also investigating joint development opportunities with the operators of adjacent acreage."

The key is the final statement. "investigating joint development opportunities with the operators of adjacent acreage".

Thats as clear an indication that they mean RIA as I think you'll see, especially as RIA are planning to start drilling towards the end of 2011 and Afren aren't even mentioning drilling yet.

This could mean a shared pipeline installation (certainly for the gas) and possibly a shared FPSO solution for the oil if they go down the FPSO route. This would likely result in being able to sell the oil in larger packages and therefore getting a higher price for it. Afren have done this on their Okoro field but without a partner, they were selling smaller packages but when they sold larger ones, they generated higher price / barrel. The gas solution would likely be to send the gas to the Lion Gas Plant which is 100% owned by Afren. This would result in off-take agreements being signed which would be good for RIA as they have a guaranteed market to sell into.

The other thing that the statement may mean, is that Afren have a lot of larger and more prospective acreage which will be prioritised. CI-01 wasn't even mentioned in their 2010 results presentation so there is also the possibility that they may sell or farm some out (and potentially the operatorship) to a 3rd party, and I think RIA would be perfectly positioned to take this on as there would be synergies with developing both blocks together.

Hopefully we will see some movement from both sides soon on this.