LON:PHAR | Congo (Brazzaville) - Marine XI & XIV

13th Aug '09 by emptyend

111 comments 50124 reads

This thread is to discuss matters relating to the assets in Marine XI and Marine XIV blocks that will be the subject of a two-well drilling campaign in 2009 (scheduled to spud the first well on 19th August 2009) and a further two wells in mid 2010.

Congo (Brazzaville) is relatively "safe" politically and both blocks in which SOCO has an interest are offshore and surrounded by producing fields. The location and context of these assets can clearly be seen on pages 13 and 14 of yesterday's interims presentation

The first well in the upcoming campaign will be the Liyeke well on prospect S1, which is a large carbonate structure at a shallow depth, such that it is expected that the well will take only 2-3 weeks to drill. This is the oval-shaped prospect shown in the middle of Marine XI on page 13 and looks to be some 25-30 square km in areal extent. The potential of this prospect has been flagged in recent times as having about 100mn bbls of recoverable oil, though the initial indications (from mid-2008) were that it might be rather larger (up to 250-300mn bbls, though just possibly this may have been the result of some confusion between OOIP and recoverables). We'll soon see! [Edit 8/09: Structure water-wet; oil had migrated into overlying sands and was immovable. No impact on prospectivity of other plays. http://www.investegate.co.uk/Article.aspx?id=200909080700066645Y ]

The second well is an appraisal of the Viodo discovery involving a modest step-out of 1km from the discovery well. Essentially this is just intended to prove up commerciality of Viodo and to enable development to be started. Because there is so much infrastructure surrounding Viodo there will not be much "mystery time" before it is developed, assuming the appraisal is successful. Consideration was given to a much bigger step-out (see the extension shown on p14) but it was decided to stick with the safer option for now in order to get development started.

SOCO's holdings in these blocks are via the 85%-owned SOCO Congo Limited and its 100%-owned SOCO EPC subsidiary. In both blocks SOCO EPC is the operator.

SOCO EPC holds a 29% stake in Marine XI, having farmed out an 8.5% interest to Petrovietnam in exchange for some concessions in defining the HPHT appraisal area in Vietnam block 16-1. Other partners are SNPC 15%, Rafia Oil 18.75%, Africa Oil…

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extrader

2nd Nov '14

Hi again,

Two other things to throw into the mix , perhaps ?

(1) PetroVietnam has an 8.5% interest in Marine XI, so (a) they may 'owe one' to Soco for the introduction and (b) there's some more overlap, not just ENI/SIA, but potentially ENI/PVN 'going forward'....

(2) Soco's interest is held via Soco Congo, which is 85% SIA and 15% Quantic Oil, which IIRC is Rui de Sousa's personal vehicle.

So maybe lights burning in Monaco as well as Soco Towers ;-> ??

Interesting times !

ATB

emptyend

3rd Nov '14

I must say that if I were in ENI's position of having a stated aim of expanding in Vietnam and (perhaps) two 1bn boe fields that might be subject to unitisation in Congo (and/or with a geological model that suggested further prospectivity in the adjacent block).... And with ambitions to further develop an exploration presence on DRC.........

........and there was a single company that offered the possibility to resolve all of those issues at a stroke (with very little non-core baggage) .........

.......then the case for buying it would be overwhelming.

Timing might be a bit more uncertain, but the LXM-101 test results will be important, as will the state of play on the reserves assessment in VN. I could certainly see an approach being made in the next month or two, with the terms of a bid being subject to things like due diligence on TGT reservoir modelling (& assessment of reserves, which must be close to being brought to a state where it can be published) and (importantly but less predictably) satisfactory assurances about the production plans for TGT under the revised FDP.

Importantly also, I think that it would be possible to achieve SOCO's price objectives, whilst leaving ENI with explo upside in Congo/DRC and production upside in VN.

As ever, time will tell - but I'd expect a deal to be done in due course. And on a friendly basis, because there is no chance a hostile bid would succeed.

Mancman

Hi EE,

I wonder if ENI would be happy taking over the VN assets without the SOCO directors on board, at least for a time until current production issues have been resolved; they have a lot of experience in dealing with the partners, who have not always been the easiest. Perhaps I am being too influenced by the deal that Buckingham struck over the sale of Heritage!

cheers

J.T.

Hi JT,

Fair question - however, ENI already have a relationship with all the host Governments - and with PV in Vietnam. I'm not sure if they are partnered with PTTEP anywhere, but in any case PTTEP's stake is a minority in the JV.

I can't see that being an issue - and I would think it possible that ENI might wish to do something before the FDP submission is finalised (so that they have influence and input on it).

rgds

oilretire

4th Nov '14

A very GOOD morning to all :-)

The well significantly exceeded pre-test expectations, reaching a post stimulation frac peak rate of 5,174 barrels of oil per day ("BOPD") and 3.65 million standard cubic feet of gas per day ("MMSCFD").

And.........

The well results will now be analysed in order to determine the continuity of the well with the nearby discovery in the Marine XII Block.

But they already gave us a clue to the answer to that one in the at TD news......

Analysis of the logs over the hydrocarbon zone indicates petrophysical parameters in line with those published for the Litchendjili field on the adjacent Marine XII Block operated by ENI.

http://www.investegate.co.uk/soco-international--sia-/rns/well-test-results/201411040700230455W/

Well test results are out on LXM-101 ......... You have to love the phrase "significantly exceeded pre-test expectations"

http://www.investegate.co.uk/soco-international--s...

Ps...sorry to echo oilretire. For some reason his post didn't show.

The question has now become one of the proving connectivity ( which seems highly probable) and then unitising.

And then there is the question of whether ENI's other recent find also strays into our block - and what they might want to do about it......

fuiseog

Another duck lined up -:)

yup. I'm also interested as to why the IMS isn't "ready to go" on the back of this news. Perhaps there is more news to come?

tiswas

Perhaps the IMS is going to carry one of the sector's first profit warnings to reflect the fact that they are receiving a couple of million dollars less each week following the big drop in oil price and they wanted to separate the good news?

Mind you I would prefer your thinking!

peterg

I'm also interested as to why the IMS isn't "ready to go" on the back of this news. Perhaps there is more news to come?

How long is connection testing likely to take? Presumably if they can do it in around a week they would be better off waiting? Clearly connectivity, or not, is a big issue here. Potentially without connectivity the resource may not be very large, and needing it's own development might be of limited commerciality - whereas if they can establish connectivity it's a very much better looking picture, in many ways.

Hi Peter,

That might be right. A bit more analysis time may enable firmer conclusions - though it isn't clear whether they have enough technical information on the ENI field. My guess would be that that is a discussion that would take weeks not days.

djpreston

And youve got to love the market's reaction.... It really isnt a sector that has any love at the moment. Find oil "Meh" P&A "Whack".

Time for you to put a bit back in then, Darron.... ;-)

cheers

Cuthbert C

EE

funny you should say that......

T

Doesn't today underline just how difficult it is to follow a rational, objective and dispassionate approach when sentiment has turned negative?

Hi tournesol,

Doesn't today underline just how difficult it is to follow a rational, objective and dispassionate approach when sentiment has turned negative?

Are we using 'the perpendicular pronoun' here, perchance ;-> ?

ATB

I think it is purely a question of timeframes. They will be lucky to have proven connectivity and got anywhere with negotiations on unitisations before Christmas. And in the meantime the world is going to hell in a handbasket*

*According to the consensus of City sources.........Meanwhile I am always impressed how market volatility seems reach its heights around the end & start of the "bonus year" at Goldman Sachs (I assume it is still the case that the "new year" starts on 1st November.....)

Apparently the process for unitising is that neither party gets to see the other side's data until SOCO submit their data to the authorities, who will then decide whether it is part of ENI's field. If they consider it is, they will then instruct both parties to negotiate.

That sounds the sort of thing that may take a few weeks.

kenobi

are you suggesting that the IMS might be waiting on this ? or quiet the opposite saying that it cannot be this because the timescale is too long ?

It might be interesting timing if these negotiations should be happening at the same time as reserves upgrades are finalised, that would seem like a point where a wide ranging conversation could be had.

Only weeks!

So they certainly won't be holding up the IMS waiting on it. Wonder if there is another, potentially interesting reason for the IMS not being out now? Other than the boring one of it still being 2 weeks to the anniversary of the last one! (Though now after the 2 year anniversary of the previous one). Could there be VN news in the pipeline?

Congo (Brazzaville) - Marine XI & XIV

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Emptyend

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