The Oil Council's Drake Lawhead (DL) interviews Dominion Petroleum CFO Rob Shepherd (RS).
DL: East Africa is an exploration hotspot now. Why did Dominion first start to look for hydrocarbons in East Africa?
RS: To be honest, I think the founders of the Company were just lucky – as far as I am aware, they were actually in Tanzania in 2005 looking for minerals deals and happened to stumble across the onshore licences we hold which they opportunistically signed up in 2006 and only then started to think about what to do with them. One thing then led to another, offshore Block 7 (Tanzania) was secured as was Exp. Area 4B (Uganda), so without necessarily fully appreciating the potential, Dominion Petroleum (LON:DPL) was in late 2007 already sitting on what appear now to be highly attractive assets.
DL: From a financial perspective, what are the challenges of operating in East Africa?
RS: I think there are a couple of things that stand out, firstly that a lot of investors still associate such areas as having a high degree of political risk, and so we spend quite a lot of time trying to explain reality – whilst there is of course risk associated with East Africa, at the end of the day, some risks, such as change of investment framework, are actually lower than places like the UK (as evidenced by the recent tax grab) and I for one still wonder whether political risks in the Falklands are as low as many people seem to assume. Secondly, things always take far longer than expected to progress in Africa, which is just the way it is, but trying to explain this to an investor sitting in New York or London isn’t always easy.
DL: Big oil has moved into your neighbourhood, with the likes of ExxonMobil (NYSE:XOM), Statiol, Petrobras, Tullow Oil (LON:TLW) and Anadarko owning licenses nearby. What is the advantage of an independent O&G company like Dominion over the blue chip companies?
RS: Probably the single biggest advantage is to be able to move quickly, as evidenced by our recent licence acquisition in Kenya – the opportunity came up in December and so we jumped on it quickly without having to justify it to various new country entry committees, budget police or…
