The role of Independent explorers in unlocking new plays and basins offshore Southern Africa
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The role of Independent explorers in unlocking new plays and basins offshore Southern Africa
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The information contained in this presentation (hereinafter, this “Presentation”) has been prepared by Azimuth Limited and its affiliated group companies
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1
Introduction to Azinam, a PE backed E&P company
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
Azinam’s strategy is to participate in a drilling
programme over the next three years, benefitting from
cyclical lows in drilling cost
Additional value creation for Azinam yielded from third
party activity and success, and opening of new multi-
billion barrel basins
2
Launched by Seacrest in 2012 with seismic data advantage
11. Anchor position – “seismic for equity” 3 Playing the cycle to our advantage
• Global • Azinam takes
screening advantage of
programme downturn to
identified consolidate
potential and acreage
opportunity position and
offshore invest in
Namibia seismic
2012 2013 2014-18 2019-2021
22. Successful proof of source drilling 44. South Africa entry and Azinam drilling
HRT Drills
Wingat and • 2013 HRT wells • The Future: Take
Murombe wells
recovered oil
Cormorant advantage of low
and proved Prospect S drilling costs to
working source test portfolio
rock in the area • Exposed to third
party value
Sample of light creation
(41° API) oil from
the Wingat-1
exploration well
3
Under explored Southern Africa…
Southern Africa in comparison to other prolific basins
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
Offshore US and Gulf of Mexico
Since 2000, there have been 2,219 wells
Source: Wood Mackenzie Upstream Data Tool, February 2019; Norwegian Petroleum Directorate; UK Oil & Gas Authority’s Well insight report 2018; Rystad Well Cube 4
Why is the Southern African Atlantic Margin underexplored?
Historically a number of factors have impacted exploration appetite and activity
CHOICE COST
• More Mature Basins • Deepwater wells
• Shallower waters • Expensive seismic surveys
• Areas with easier access • Complex supply chain
DATA
RISK
• Limited Seismic surveys – 2D
• Financial Risk vs Reward (ROI)
• Surface Area vs data coverage low
• Unknown frontier areas
• Technology
INFRASTRUCTURE
OIL PRICE
• Limited refineries
• Substantial fall in mid-80s
• Poor transport links
• Low price maintained through 90s
• Distance & Geography Challenges
5
Example: Namibia Exploration History
Largely unexplored region with only 16 exploration wells drilled over 48 years
Phase 1: Phase 2: Oil price Phase 3: Oil price Phase 4:
UN Sanctions
1968-1976 1990-1997 drop 2011-2014 drop 2018+
$160
$140 1974 2012-14
First well drilled 1998 6 wells drilled.
Wingat-1
$120 (Kudu 9A-1) 2 wells drilled recovered 41
encountered in the Luderitz API Oil
$100 gas basin
$80
10 year hiatus for
international O&G 1994/95
$60 4 wells drilled
in the Walvis
basin
$40
2008
1 well drilled 2018
in the Namibe 2 wells drilled
Basin as activity
$20 Prices dropped ~58% from picks up
start of 1997 to end of 1998
1970 1980 1990 2000 2010
1) Source: Macrotrends with data from EIA, NAMCOR; 2) Graph displayed using logarithmic scale and historical prices inflation adjusted 6
Sub-Saharan Africa – 2000 to 2014
Since 2000, exploration activity has confirmed the region’s oil and gas potential
2000 2014
Senegal
Nigeria
Ghana
Gabon Equatorial
Guinea Kenya
DRC
Angola
Mozambique
KEY
Established petroleum
provinces
Emerging petroleum
South Africa
province
Source: Azinam estimates 7
Sub-Saharan Africa – 2000 to 2014
Who were the Pioneers and the Play openers?
2014
2000
KEY
Established petroleum
provinces
Emerging petroleum
province
Source: Azinam estimates 8
2019 Sub-Saharan Africa
Who were the Pioneers and the Play openers?
2019
2014
KEY
Established petroleum
provinces
Emerging petroleum
province
Source: Azinam estimates 9The changing of the Southern Africa Atlantic Margin?
All of these factors are changing
CHOICE COST
• Exploration acreage is shrinking • Drilling costs at cyclical lows
• Giant discoveries lie in Frontier basins like • Enhanced access to capital
Africa • Revived Farm-in market
RISK DATA
• Political changes (SA – Apartheid ended,
• Extensive broadband 3D seismic data
Angola civil war ended)
• Drilling Technology
• Improved and defined fiscal terms
OIL PRICE INFRASTRUCTURE
• Oil price uptick • Investment in refineries & LNG
• Growing consumer demand • World class ports
• Growing investor confidence • Growing energy demand in Africa
10Improved Fiscal Terms across Sub-Saharan Africa
Low Government take & stable investment environments
Government take1
0% 20% 40% 60% 80% 100%
South Africa
Guinea Bissau SOUTH AFRICA2 NAMIBIA2
Morocco
Namibia
Mauritania
Côte d'Ivoire
Senegal
Kenya
Equatorial Guinea
Cameroon
Benin
Congo
Angola
DRC
Gabon
Tanzania
1) Average tax across range of Namibian oil and gas assets 2) Africa Energy Corporate Presentation January 2018 Available on their website
11Current drilling costs at lowest levels
Leveraging the weak rig market to access portfolio of high value opportunities
Drilling cost at cyclical lows1 Significant resources & robust CoS2
USDm 1,600
$120
110m
1,400
97m
$100 > 70% fall in well
89m 91m
Gross Unrisked Resources (mmboe)
costs since 2014 1,200
$80
1,000
$60
800
$40
28m 600
$20
17m
400
$0
200
0
0% 10% 20% 30% 40%
2013 2014 2015 2016 2017 2018 COS
Channel 2 Fan 7 Osprey Wolf Marula
1) Source: NAMCOR and Azinam; 2) Source: LR Synergy CPR & Azinam estimates 12What has changed in Southern Africa?
Additional game changing factors
DISCOVERIES SOURCE ROCK
• Kenya – Emekuya • Conjugate Story
• Tanzania – Zafarani • West African Margin - the system
• Uganda – Jobi-Rii works in adjacent basins offshore
• Ghana – Jubilee Brazil
• South Africa – Brulpadda • Brulpadda extending this story to
• Angola – Agogo Southern Africa
PERCEPTIONS
• Russian doll effect RESERVE REPLACEMENT
• Independents unlock the opportunity • Pressures building
and reduce the risk, Majors & • Giant liquid plays in demand
Supermajors invest • Growing global & local consumer
• East & West Africa basins unlocked demand
• Southern Africa…
13Source Rock: Brazil & Africa Correlations
Conjugate basins & deepwater plays of the South Atlantic
1)
2)
Sources: 1) Selma Usiku, MSc, 2016 adapted from Macgregor 2013;Torsvik et al. 2009; Weimer & Pettingill 2007. 2) Mello & Katz, 2000 14Why Independents?
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
15Who’s next to unlock Southern Africa ?
Who will be the new pioneers?
FUTURE
2019
KEY
Established petroleum
provinces
Emerging petroleum
province
Source: Azinam estimates 16You can also read
