PLATTS INTERVIEW: Australia's Pura Vida eyes another big African...

PLATTS INTERVIEW: Australia's Pura Vida eyes another big African farm-out
Sydney (Platts)--18Nov2013/950 pm EST/250 GMT

Australian oil junior Pura Vida Energy is hoping it can replicate its recent $230 million farm-out deal in Morocco at its deepwater pre-salt play in Gabon, Managing Director Damon Neaves told Platts in an interview last week.

Pura Vida earlier this month farmed out a 52% stake in its Mazagan permit offshore Morocco to a subsidiary of Freeport-McMoRan Oil & Gas. Under the terms of the deal, Pura Vida received $15 million in cash and is fully funded for a two-well drilling program capped at $215 million.

The deal is believed to be the biggest farm-out ever by a listed Australian oil explorer, Neaves said. It is also bigger than any transaction concluded by the other players operating in Morocco, which has attracted the likes of BP and Cairn Energy in recent months.

"We listed 18 months ago with a market cap of $8 million and now we've funded two $100 million wells," Neaves said. "We have $20 million cash in hand and two other projects in Gabon and Madagascar. We are looking to replicate [the deal] in Gabon," he added.

"The size of the Morocco deal is a reflection on [our] acreage. The other [explorers] are chasing Cretaceous and Jurassic plays, but we're after Tertiary or Middle Miocene."

Pura Vida's Moroccan acreage is frontier, but in a quality neighborhood with Chevron to the north and BP to the east and south. Ten wells are expected to be drilled in the area over the next 18 months.

Freeport plans to drill its first well in 2014 on the Toubkal prospect. The target has gross mean resource potential of 1.5 billion barrels, or 350 million barrels net to Pura Vida.

Pura Vida's 80%-held Nkembe block offshore Gabon, acquired in January 2013, includes the Loba oil discovery, estimated to contain 20 million barrels, and a wide variety of exploration plays associated with salt basins, according to the company. The block has estimated gross prospective oil resources of 1.019 billion barrels.

The Nkembe block is in the heart of a producing oil province, among fields that have pumped as much as 500,000 b/d, Neaves said.

"Lots of drilling is planned in Gabon, with 10 wells expected between now and mid-year, mostly targeting pre-salt," according to Neaves. "The first well drilled [in August 2013] was Total's Diaman-1B which was a discovery and proves we've got a working petroleum system there," he added.

"We're running a farm-out process on the block now ... we're a junior among majors, but we are looking for an industry partner to fund drilling, which could take place as early as next year," Neaves said.

"Our strategy rests on our ability to attract industry funding rather than equity. Our successful Moroccan strategy proves you can generate value in the pre-drill phase, de-risk by funding it on someone else's balance sheet, and that it can be done on a meaningful scale."

Pura Vida will also look for a similar deal at its acreage offshore Madagascar, acquired just a few weeks ago when it farmed into a 50% stake in Sterling Energy's Ambilobe production sharing contract.

"The political situation in Madagascar is working out," Neaves said. "ExxonMobil is already there with a block to the south [of ours] and there will be a bid round next year. It's pre-salt, like [the discoveries] in Angola and Brazil."