The other intriguing news of late is that BP has made a major commitment to deep-water exploration plays off the coast of Morocco. The group has made a firm commitment to US driller Kosmos to provide funding for wells in three blocks it has farmed into: BP has taken a 45 per cent stake in the Essaouira and Tarhazoute licence blocks, and a 26.3 per cent share in the highly prospective Foum Assaka licence. BP will cover all of Kosmos' share of drilling costs in each of the prospects, and it has also agreed to spring for some of Kosmos' share on any follow-up wells, in addition to covering a pro rata share of past costs connected to the licences.
The fact that BP has given a tacit seal of approval provides a positive beat for those oil & gas already committed to the region, particularly as the prospects are pretty much 'blue-sky' at this stage. It was certainly welcome news for one of our preferred junior plays in the sector - Fastnet Oil & Gas (FAST) - a third party in the Foum Assaka licence, which is also pursuing its own farm-out process to bring in a funding partner. The industry view is that the BP move effectively derisks the region - only time will tell. Eyes now will be on upcoming drill work by Cairn Energy (CNE) and Genel Energy (GENL), both of which the IC has on a buy.
Hopes are high: success at the early stage high impact wells could help to establish Morocco as a major new oil frontier and the majors - as they have in Kurdistan - will descend en masse. This time, however, BP may have stolen a march on its rivals.
TPT Price at posting:
23.0¢ Sentiment: Buy Disclosure: Held
