Conoco's African Portfolio

Time to focus on Conoco, as enough has been discussed about Cairn.

Guys as mentioned last nite COP have a Conference call in NY on April the 8th. Am hoping there's some Q&A on Senegal. More so how important is Senegal to them. As per Cairn COP were certainly excited about the 2 discoveries,  Fan-1 which showed a working petroleum system in place & SNE which was a textbook style discovery.

Portfolio:

Conoco had assets in 5 countries in Africa. In Nov'13 they sold their Algerian operations to PERTAMINA for $1.75bil and last year sold their Nigerian Ops to Oando Energy (OER) for US$1.5bil.

This leaves them with just 1 producing asset ie Libya which currently has its dramas given the civil unrest & disruptions at the Es Sider Oil Terminal. Frequent shutdowns affect their sales & cashflows (& subsequently their costs, more on this a bit later).

They started drilling deepwater offshore Angola using the drillship Ocean Rig Athena last year. The first well Kamoxi-1 in Nov'14 was dry, cost them US$140mil net. Currently drilling Omosi-1 & have 2 more to go. The drillship is contracted till 2017.

Which brings us to Senegal. 2 out of 2 discoveries should b good enough firstup, with more drilling to come later in 2015.

My gutfeeling is they'll bail out of Libya given the dramas over there & focus on West Africa, so it's worth keeping an eye on them rather then follow Cairn.

Resource base:

Next up is their resource base in Africa.

End of Dec'14 they had 242 mmboe in Proven developed & undev oil & gas.
Rather 204 mmbbls in Oil & 227 bcf in Gas reserves. Libya is the only producing asset on hand.

So any future findings leading to commerciality esp. from Senegal should b an added bonus.

Costs:

Their 2012 & 2013 costs for African operations were US$6.68/boe & US$11.7.

These increased in 2014 as they sold 2 producing assets. 2014 costs were US32.2/boe (includes production costs, tax & DDA).

Still cheap one might argue. These should remain in the low-mid 30's as they spend capital in drilling in 2015-2016 in Angola & Senegal.

Whilst Cairn have booked their share of SNE, Conoco should also book their net WI of 35% of 330 mmbbls (ie 115.5 mmboe). Their farmout details with Cairn weren't completely released, think they have the option to become Operator at some stage if they want to.

So hope these are the things to keep in mind going fwd with Conoco in Africa & the JV findings in Senegal.

I cant think of any thing else to add, covered their portfolio footprint, costs, resource base.

Should anyone else think of something on this topic pls feel free do add yr comments, cheers.

(PS: their Dec'14 annual SEC filing Form-10K is a must read on costs, sales, resource).