coleneldrake. What I like about this site is the differing...

coleneldrake. What I like about this site is the differing opinions it portrays.

The article below by GNOOC for a 45% stake AKPO field with a 700 mill barrel play in West Africa seemingly shows they may have paid a little too much ($2.3 Bn) given your $50 mill estimate for Senegal with potential 1 bill+ reserves identified by a 20 mill 3D survey.

This potential will be nearly 100% confirmed by a positive CSEM Shell result which all FAR holders are holding out for.

IMO the numbers below in conjunction with a positive CSEM result will make a $50 mill value look a little under baked.

This article demonstrates what Chinese companies are prepared to pay for West African leases to satisfy their thirst for oil.


> Article


CNOOC offers $ 2 bn for Nigerian oil field
09-01-06 China National Offshore Oil Company (CNOOC), said it will pay $ 2.3 bn (N 299 bn) in cash to acquire 45 % shares of South Atlantic Petroleum, owned by former Defence Minister, Gen. Theophilus Danjuma (rtd.), in Akpo oil field located in OPL 246.
The Chinese investors would be taking up the equity which was turned down in December by India's ONGC, citing risk factor.

CNOOC is China's biggest offshore oil producer, and its acquisition of interest in the Nigerian oil field would be China's third big overseas takeover since August 2004 to meet increasing energy demand.
CNOOC Chairman, Fu Chengyu, announced the decision. The company said the acquisition will be funded from CNOOC's internal resources. The price per barrel of oil equivalent of about $ 4.60 is "on highly attractive terms when compared to other recent world-scale upstream transactions," CNOOC said.

The Nigerian National Petroleum Corporation (NNPC), with 50 % equity holding, is the concessionaire for the deepwater block, whereSouth Atlantic Petroleum holds 10 % equity. Other partners in the block are Total, the operator with 24 % interest and Brazil's Petrobras.
NNPC had conferred the contractor status on South Atlantic, implying that the local oil firm would have to source for the 50 % of the total fund needed to develop the oil field, estimated to hold more than 700 mm barrels of oil and condensates. South Atlantic Petroleum, last August, had opened negotiations in London with prospective bidders that will acquire 45 % of the 50 % NNPC equity and thus provide the funding.

According to the Production Sharing Contract (PSC) agreement for the Akpo field, the NNPC will take 15 % share in the profit earned from oil exports from the field while the contractor takes 35 % share. India's ONGC, which initially clinched the bid for the South Atlantic's interest in Akpo field, later lost it after the Indian government declined to approve the company's $ 2 bn (N 260 bn) bid for the block.
Although the Indian government linked the rejection to "high risk" factor, NNPC later said that the non-approval was due to financial constraints, and its inability to commit further investment in Nigeria where the Indian state-run firm already had its hands full.

China, which was expected to consume 6.63 mm bpd of oil last year, imported an average of 2.38 mm bpd in the first three quarters of 2005, or 36 % of the total, according to December 2005 Oil Market Report by the International Energy Agency in Paris.
The acquisition "will add to our production targets and is within our pricing range," Yang told. "Before the Akpo field starts production in the first half of 2008, we'll have a very small dilution in earnings per share. But after that, it will be one of the factors boosting earnings."

The Akpo oil field located in OPL 246, is said to hold 700 mm barrels of crude oil reserves and gas reserves of about 2.5 tcf. The field along with Shell's Bonga, ExxonMobil's Erha and Chevron's Agbami oil fields, will contribute to the significant increase in Nigeria's oil production capacity.
Discovered in 2000, the Akpo field is scheduled to commence production in the last quarter of 2008 and is expected to quickly reach peak production of 225,000 bpd of which nearly 80 % will be condensate.

Last August, Total awarded a $ 1.08 bn contract to Technip of France and South Korea's Hyundai Heavy Industries to build the floating, production, storage and offloading (FPSO) vessel for the field, while Italian oilfield services giant Saipem got a $ 850 mm contract covering the umbilical, riser and flowline (URF) package.
The field development plan calls for 22 producing wells, 20 water injection wells and two gas injection wells, tied back to a floating production, storage and offloading (FPSO) vessel with a storage capacity of 2 mm barrels. Its condensate output will be exported via a buoy located 2 km from the FPSO, while the gas will be piped 150 km to the Amenam/Kpono platforms, from where it will be sent to the Bonny LNG plant.



Source: This Day