The role of Independent explorers in unlocking new plays and basins - - PowerPoint PPT Presentation
The role of Independent explorers in unlocking new plays and basins - - PowerPoint PPT Presentation
The role of Independent explorers in unlocking new plays and basins offshore Southern Africa Legal Disclaimer The information contained in this presentation (hereinafter, this Presentation ) has been prepared by Azimuth Limited and its
Legal Disclaimer
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The information contained in this presentation (hereinafter, this “Presentation”) has been prepared by Azimuth Limited and its affiliated group companies (hereinafter, together, the “Company”). This Presentation does not constitute or form part of, and should not be construed as, an offer or invitation to sell or issue
- r any solicitation of an offer to purchase or subscribe for any securities in the Company in any jurisdiction. The Presentation, its contents, references and its
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Introduction to Azinam, a PE backed E&P company
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Uniquely positioned in Namibia & South Africa – the new industry hot spot
Focused niche explorer Large offshore acreage position across Namibia and South Africa Portfolio with Basin and Petroleum system diversity Additional value creation for Azinam yielded from third party activity and success, and opening of new multi- billion barrel basins Azinam’s strategy is to participate in a drilling programme over the next three years, benefitting from cyclical lows in drilling cost
Launched by Seacrest in 2012 with seismic data advantage
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2012 2013 2014-18 2019-2021
- 1. Anchor position – “seismic for equity”
- Global
screening programme identified potential and
- pportunity
- ffshore
Namibia
- Azinam takes
advantage of downturn to consolidate acreage position and invest in seismic
- The Future: Take
advantage of low drilling costs to test portfolio
- Exposed to third
party value creation
Playing the cycle to our advantage
- 2. Successful proof of source drilling
- 4. South Africa entry and Azinam drilling
- 2013 HRT wells
recovered oil and proved working source rock in the area
HRT Drills Wingat and Murombewells
Sample of light (41° API) oil from the Wingat-1 exploration well
1 3 2 4
Cormorant Prospect S
Under explored Southern Africa…
Southern Africa in comparison to other prolific basins
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Source: Wood Mackenzie Upstream Data Tool, February 2019; Norwegian Petroleum Directorate; UK Oil & Gas Authority’s Well insight report 2018; Rystad Well Cube
Offshore US and Gulf of Mexico Since 2000, there have been 2,219 wells Norwegian Continental Shelf as of 2018, 6,477 E&A wells drilled UK Continental Shelf as of 2018 over 7,800 E&A wells drilled Offshore Indonesia Since 2000, there have been 715 wells
Why is the Southern African Atlantic Margin underexplored?
Historically a number of factors have impacted exploration appetite and activity
5 OIL PRICE
- Substantial fall in mid-80s
- Low price maintained through 90s
CHOICE
- More Mature Basins
- Shallower waters
- Areas with easier access
RISK
- Financial Risk vs Reward (ROI)
- Unknown frontier areas
INFRASTRUCTURE
- Limited refineries
- Poor transport links
- Distance & Geography Challenges
COST
- Deepwater wells
- Expensive seismic surveys
- Complex supply chain
DATA
- Limited Seismic surveys – 2D
- Surface Area vs data coverage low
- Technology
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Example: Namibia Exploration History
Largely unexplored region with only 16 exploration wells drilled over 48 years
10 year hiatus for international O&G 1974
First well drilled (Kudu 9A-1) encountered gas
1994/95
4 wells drilled in the Walvis basin
1998
2 wells drilled in the Luderitz basin
1) Source: Macrotrends with data from EIA, NAMCOR; 2) Graph displayed using logarithmic scale and historical prices inflation adjusted
2008
1 well drilled in the Namibe Basin
2012-14
6 wells drilled. Wingat-1 recovered 41 API Oil
2018
2 wells drilled as activity picks up Phase 1: 1968-1976 UN Sanctions Phase 2: 1990-1997 Oil price drop Phase 3: 2011-2014 Phase 4: 2018+
$20 $40 $60 $80 $100 $120 $140 $160 1970 1980 1990 2000 2010
Oil price drop
Prices dropped ~58% from start of 1997 to end of 1998
Sub-Saharan Africa – 2000 to 2014
Since 2000, exploration activity has confirmed the region’s oil and gas potential
Source: Azinam estimates
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2000 2014
Ghana Mozambique Senegal Angola Nigeria Gabon DRC South Africa Equatorial Guinea Kenya
Emerging petroleum province
KEY
Established petroleum provinces
Sub-Saharan Africa – 2000 to 2014
Who were the Pioneers and the Play openers?
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Source: Azinam estimates
2014 2000
Emerging petroleum province
KEY
Established petroleum provinces
2019 Sub-Saharan Africa
Who were the Pioneers and the Play openers?
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Source: Azinam estimates
2019 2014
Emerging petroleum province
KEY
Established petroleum provinces
OIL PRICE
- Oil price uptick
- Growing consumer demand
- Growing investor confidence
CHOICE
- Exploration acreage is shrinking
- Giant discoveries lie in Frontier basins like
Africa
The changing of the Southern Africa Atlantic Margin?
All of these factors are changing
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- Political changes (SA – Apartheid ended,
Angola civil war ended)
- Improved and defined fiscal terms
INFRASTRUCTURE
- Investment in refineries & LNG
- World class ports
- Growing energy demand in Africa
COST
- Drilling costs at cyclical lows
- Enhanced access to capital
- Revived Farm-in market
DATA
- Extensive broadband 3D seismic data
- Drilling Technology
Improved Fiscal Terms across Sub-Saharan Africa
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Low Government take & stable investment environments
0% 20% 40% 60% 80% 100% South Africa Guinea Bissau Morocco Namibia Mauritania Côte d'Ivoire Senegal Kenya Equatorial Guinea Cameroon Benin Congo Angola DRC Gabon Tanzania Government take1
1) Average tax across range of Namibian oil and gas assets 2) Africa Energy Corporate Presentation January 2018 Available on their website
NAMIBIA2 SOUTH AFRICA2
89m 97m 91m 110m 28m 17m
$0 $20 $40 $60 $80 $100 $120 2013 2014 2015 2016 2017 2018 USDm
Current drilling costs at lowest levels
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Leveraging the weak rig market to access portfolio of high value opportunities
1) Source: NAMCOR and Azinam; 2) Source: LR Synergy CPR & Azinam estimates
> 70% fall in well costs since 2014
Drilling cost at cyclical lows1 Significant resources & robust CoS2
200 400 600 800 1,000 1,200 1,400 1,600 0% 10% 20% 30% 40% Gross Unrisked Resources (mmboe) COS Channel 2 Fan 7 Osprey Wolf Marula
RESERVE REPLACEMENT
- Pressures building
- Giant liquid plays in demand
- Growing global & local consumer
demand
SOURCE ROCK
- Conjugate Story
- West African Margin - the system
works in adjacent basins offshore Brazil
- Brulpadda extending this story to
Southern Africa
PERCEPTIONS
- Russian doll effect
- Independents unlock the opportunity
and reduce the risk, Majors & Supermajors invest
- East & West Africa basins unlocked
- Southern Africa…
DISCOVERIES
- Kenya – Emekuya
- Tanzania – Zafarani
- Uganda – Jobi-Rii
- Ghana – Jubilee
- South Africa – Brulpadda
- Angola – Agogo
What has changed in Southern Africa?
Additional game changing factors
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Source Rock: Brazil & Africa Correlations
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Conjugate basins & deepwater plays of the South Atlantic
Sources: 1) Selma Usiku, MSc, 2016 adapted from Macgregor 2013;Torsvik et al. 2009; Weimer & Pettingill 2007. 2) Mello & Katz, 2000
1) 2)
Why Independents?
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There is no universal recipe for market entry and building successful businesses in Africa
- Local Knowledge, Data & Commitment
- Acreage Positions
- Excellent Government Relations
- Regional Focus
- Nimbleness & Timing
- Soft and Hard skills
- Culture & Capabilities
Who’s next to unlock Southern Africa ?
Who will be the new pioneers?
Source: Azinam estimates
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FUTURE 2019
Emerging petroleum province
KEY
Established petroleum provinces