ch’s african oil prospects draw interest

November 26, 2012, 9:48 AM
Beach’s African Oil Prospects Draw Interest

By Ross Kelly

Big oil companies have been knocking on Beach Energy's BPT.AU -0.56%door as it ramps up preparation work for an oil exploration campaign in Tanzania.

The Australian company–worth more than $1.7 billion–is growing increasingly excited about its prospects in the East African nation following a series of discoveries in the region including Tullow Oil's TLW.LN -0.21%Lake Albert prospect in neighboring Uganda.

“There’s no shortage of people with interest who’ve been approaching us,” Beach Energy Chief Executive Reg Nelson told Deal Journal Australia. “East Africa and the rift systems are one of the really hot things at the minute.”

East Africa has become a new frontier in global energy markets following some mammoth deepwater natural gas discoveries off the coast of Tanzania and Mozambique.

Beach and Tullow’s acreage is located on giant inland lakes on the East African Rift that are more prospective for oil than natural gas.

Beach has full ownership of the South Block of Lake Tanganyika in Tanzania, an expanse of water over 600 kilometers long and almost 100 kilometers across.

France’s Total in September successfully bid for ownership of the North Block and has also invested in Tullow’s Lake Albert assets in Uganda along with China’s Cnooc.

Total expects initial output of around 20,000 barrels a day from the Lake Albert field. This will gradually rise before reaching 200,000 to 230,000 barrels a day by 2020, Loic Laurandel, the company’s general manager for exploration and production in Uganda said in September.

Adelaide-based Beach has just finished gathering seismic data in Tanzania and Mr. Nelson said final processing and interpretation of the data should be complete by mid-2013.

“We want to get into a position where we’ve added value and generated some very good prospects,” he said.

“And really depending on that analysis we’ll be in a position to look at a serious farm-out”. A farm-out is an oil industry term for a stake sale.

The magnitude of any investment will depend on where the best prospects are located.

Developing prospects will be cheaper if they’re located close to the lake’s shore. That would allow Beach to put a drill pad on the shore and drill horizontally beneath the lake. But if the best prospects are located deeper in the center of the lake, developing them will be much harder.

“If our interpretation proves up good-looking prospects that can be accessed from the shore, I think that’s something we’d be very tempted to look at ourselves,” Mr. Nelson said.

“If some of the bigger targets are in the situation where you do need to mobilize something on the lake, then we’d look to get a partner with deep pockets to carry us through that.”

http://blogs.wsj.com/dealjournalaustralia/2012/11/26/beachs-african-oil-prospects-draw-interest/