MedcoEnergi buys oil and gas blocks in Tunisia

Medco Tunisia Petroleum, has entered into an agreement, effective 1 January 2014, to acquire 100% of the shares of Storm Ventures International from Storm Ventures International “Seller” for a base purchase price of $ 114.03 million, excluding an amount payable forworking capital (which is subject to a customary post-closing adjustment). The Seller is a subsidiary of Chinook Energy, which is listed on the Toronto Stock Exchange. SVI (together with its subsidiaries) is one of the leading active exploration and production companies in Tunisia, with a participating interest in eight working areas.

SVI’s interest in Tunisia comprises four exploration areas, two development areas and two production areas with concession periods of either 30 or 50 years. Out of these eight areas, five are located onshore and three are offshore. All of SVI’s blocks are located in prolific hydrocarbon areas. Five onshore blocks (Adam, Sud Remada,Bir Ben Tartar, Jenein and Borj El Khadra) are located in the Ghadames Basin, while the remaining three offshore blocks (Cosmos, Hammamet and Yasmin) are located in the Pelagian Basin off the northeast coast of Tunisia.
The completion of this acquisition is conditional upon, amongst other things, approval from the Government of Tunisia and the consent of certain existing partners in the blocks. Upon completion of the acquisition, MedcoEnergi anticipates adding 2P reserves and oil-and-gas production (net working interest before royalties, taxes and Government take) by 12.3 MMboe and 2,800 Boepd, respectively.

Production is envisaged to increase to approximately 16,000 Boepd from in fill well drilling of the existing producing block (Bir Ben Tartar) and the development of the Cosmos and Yasmin blocks (scheduled for completion in 2018) is expected to add a further 12.6 MMboe of 2P reserves.

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UK to allow shale-license holders to retain bigger areas

The UK announced new license terms to spur the development of the resource that may supply the nation with half a century of natural gas from shale rock.

The measures will allow license holders to retain bigger areas and cut costs, Energy Minister Michael Fallon said today, June 24, at a conference. The 14th licensing will be launched “shortly,” he said.

“Unlike traditional oil and gas, shale gas is not concentrated in small high-value fields, but is likely to be dispersed across large areas with ‘sweet spots,’” he told a conference in London. “I am removing unnecessary barriers and introducing a new flexibility to licenses.”

At the same time, the changes will ensure everyone has access to information earlier by cutting the length of time explorers can keep data on drilling and flow rates confidential to six months from four years, he said.

Fallon’s Conservative Party is seeking to spur shale exploration to secure energy resources as North Sea reserves decline. The Bowland basin in northern England may contain as much as 1,300 Tcf of gas, the British Geological Survey has said. That will last almost 50 years based on an extraction rate of 10%, similar to U.S. fields, according to Bloomberg calculations.

Opponents fear that hydraulic fracturing, also known as fracing, causes earthquakes and water contamination as the process uses water, sand and chemicals at high pressure to blast the fuel out of rock.

The Labour opposition party said baseline monitoring should take place for a year before extraction to ensure well integrity and safety, Tom Greatrex, shadow energy minister, said at the same conference via videolink.

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Beach Energy has taken a 20% interest in an exploration permit at the offshore Otway basin in Tasmanian waters

Beach Energy  has executed a binding sale and purchase agreement (“SPA”) for the purchase of a 20% interest in the T/49P offshore exploration permit in the  Otway Basin from 3D Oil.

In addition to this, Beach and 3D Oil have established a new joint venture by executing a joint operating agreement (“JOA”). Under the terms of the SPA, Beach will pay 3D Oil $3 million in cash with 3D Oil to remain as operator under the JOA. It is anticipated that the joint venture will commence a 755 sq km seismic acquisition program within the next twelve months, with timing subject to regulatory approvals. This work is the major commitment required to be undertaken in the initial exploration phase of the permit, with the Transaction subject to the usual government and regulatory approvals.

The T/49P permit, located approximately 20 km to the west of King Island, is 4,960 sq km in size with water depths of around 100 m. Adjacent to the permit are the Geographe and Thylacine gas fields, of which Thylacine is the largest field discovered in the Otway Basin to date.

The Transaction builds on Beach’s current position in the onshore Otway Basin, which services both South Australia and Victoria in terms of gas supply.

In relation to Beach’s onshore activity, the second well of a two well exploration program on the South Australian side of the onshore Otway Basin, Bungaloo-1, recently reached total depth. Initial observations from Bungaloo-1, and the first well in the program, Jolly-1, indicate good exploration potential for gas and liquids in both shallow conventional structural traps as well as deeper targets within these wells. Follow up analysis is being undertaken to confirm these initial observations, with a priority focus on the conventional potential within the permits operated by Beach.

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Explorers see promise in Egypt oil, gas when subsidies eased

Explorers in Egypt expect constraints on domestic energy prices to loosen, prompting new investment in oil and natural gas fields.

Companies including Citadel Capital SAE, Circle Oil Plc and Petroceltic International Plc expect President Abdel-Fattah El-Sisi to make good on promises to reduce subsidies of more than $20 billion a year and ease demands that producers sell fuel on the domestic market well below international prices, they said at a conference in London on June 27.

The changes would allow the government to cut the budget deficit and pay suppliers money owed for fuel, said Mohamed Shoeib, a managing director at Cairo-based Citadel. It’s a necessary first step if Egypt wants to lure back investors driven from the country by recent turmoil as it tries to both increase exports and meet surging domestic energy demand.

The government “should tackle the problem and not escape it,” Shoeib, whose company has about $10 billion invested, mostly in Egyptian energy projects, said in an interview. “It should happen very soon.”

Egypt is poised to become a net fuel importer as authorities divert gas from export projects to meet local demand, sometimes failing to pay the suppliers. The practice prevented the UK’s BG Group Plc from meeting contracted LNG shipments this year. The company has been in talks with the government about guarantees for future exports, with receivables for gas still owed by Egypt doubling in a year to March 31.

Oil Minister

Egypt plans to pay at least $1.5 billion to energy suppliers before the end of the year, or about a quarter of its debt as of April, Reuters reported June 26, citing Oil Minister Sherif Ismail.

Egyptian General Petroleum Corp., the state energy company, “is doing the best it can” to pay off the debt, said Chris Green, CEO at Circle Oil. “The key thing is reducing subsidy.”

Sea Dragon Energy Inc. plans to acquire additional assets in the country, said CEO Paul Welch. “The time is great now to get involved in Egypt.”

Oil producers receive international prices for their products in Egypt, while gas suppliers are paid only a fraction of what they could earn from exports when they sell on the domestic market, Stephane Foucaud, a London-based analyst at FirstEnergy Capital Corp., said in an interview at the conference.

“The gas price simply has to increase” and that will “unlock exploration” because some fields are not economic to drill at the current tariff, said David Thomas, COO at Petroceltic. “The country is full of opportunity. My question is, when the race will start?”

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Argentine governors said to seek tax breaks for rigs in oil bill

Argentine provincial authorities are pushing for tax cuts to be included in an energy bill covering the country’s nascent shale oil and gas industry, three officials briefed on the matter said.

The governors of 10 provinces with oil and gas reserves agreed to request the elimination of a 35% levy on imports of rigs and other machinery before agreeing to the federal government’s proposed reform, the provincial officials said, asking not to be named as discussions are private. Provinces also want royalties to be based on global benchmarks rather than the price set by the federal government, they said.

The demands are part of federal-provincial talks on replacing a 1967 hydrocarbons law with rules for distributing revenue from the world’s fourth-biggest shale oil reserves and second-largest shale gas reserves. The bill would end political tensions derived from unclear regulations for both shale and offshore resources and lure more investors to Vaca Muerta, a Belgium-sized formation in the country’s south.

“All I can say is that all the actors are participating in the writing of the draft,” Horacio Mizrahi, spokesman for federal Planning Minister Julio De Vido, said by phone from Buenos Aires. “We prefer not to comment while negotiations between all parties involved are going on in a civilized way.”

Chubut Governor Martin Buzzi, who heads a committee of the 10 provinces, and Neuquen Governor Jorge Sapag weren’t available to comment, their respective assistants said.

While the provinces are prepared to reduce their taxes and the participation of provincial companies in projects, they want the same benefits stipulated in a July decree imposed for a venture between YPF SA and Chevron Corp. to be extended to all companies, the officials said.

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