E&P Notes (April 2021)

Shell Selling Onshore Egypt Assets Shell Egypt and one of its affiliates have signed an agreement with a consortium made up of subsidiaries of Cheiron Petroleum Corporation and Cairn Energy PLC to sell its upstream assets in Egypt’s Western Desert for a base consideration of $646 million. Additional payments of up to $280 million between 2021 and 2024 will be made contingent on the oil price and the results of further exploration. The transaction is subject to government and regulatory approvals and is expected to complete in the second half of 2021. The package of assets comprises Shell Egypt’s interest in 13 onshore concessions and the company’s share in Badr El-Din Petroleum Company. Shell will shift its exploration focus in Egypt offshore, which includes seven new blocks in the Nile Delta, West Mediterranean, and Red Sea. Chevron Begins Production From Sarta-2 Well in Iraq Chevron has started production from the Sarta-2 well at the Sarta field in the Kurdistan region of Iraq, partner Genel Energy said. Gross field production now stands at more than 10,000 B/D. Sarta production is expected to increase from the existing two producing wells as facility optimization continues after production startup. A fresh appraisal drilling campaign is scheduled to begin soon, with the Sarta-5 and Sarta-6 wells set to be drilled back-to-back. Chevron is operator of the Sarta production-sharing contract (50%) with partners Genel Energy (30%) and the Kurdistan Regional Government (20%). Colombia Eyes Licensing Round Results in November Colombia is expected to soon reveal the schedule for its 2021 licensing round offering 32 blocks for oil and gas exploration, with results expected in November. In 2020, the nation awarded three areas to Canada-based companies Parex Resources and Canocol Energy despite the double-whammy of crashing crude demand and a global pandemic. With oil prices on the mend and an aggressive vaccine dissemination program, Colombia is hopeful that interest in its oil and gas acreage returns to pre-pandemic levels. The National Hydrocarbon Agency (ANH) expects to award at least half of the available tracts, which are part of more than 500 areas identified by the ANH in the country and include mature fields, emerging basins, and bordering areas. Exploration in Colombia fell dramatically in 2020 with only 18 wildcats drilled vs. the 45 planned, with most of the expected investment deferred to 2021-2022. While the country has allowed pilot projects testing for unconventional oil, there currently is a ban on fracking operations in the country. Israel Begins Prep Work for Fourth Offshore Round Israel’s Ministry of Energy has announced plans to launch the fourth offshore bidding round (OBR 4) for exploration licenses in the country’s exclusive economic zone soon. OBR 4 is part of a multiyear program to encourage the exploration and development of Israel’s natural resources to provide low-cost, environmentally friendly energy to Israel’s consumers and businesses and to develop markets for Israeli natural gas beyond its borders. As in OBR 2, the Ministry is planning to offer several zones to qualified companies, with each zone comprising approximately four licenses having a total area of up to 1600 sq km. Around 25 exploration licenses (blocks) have been mapped and will be grouped into six clusters. The exact dates of the stages of the bid round and grouping of the licenses in clusters will be determined later. No decision has yet been made on the winner of the license for natural gas and oil exploration in Block 72 in the third competitive bid round carried out in 2020. The Ministry will announce the formal commencement of OBR 4 and its delineation in the near future and provide detailed information on its website www.energy-sea.energy.gov.il at that time. Exxon Drills Dud at Bulletwood Offshore Guyana Exxon encountered noncommercial hydrocarbons with a test of its Bulletwood prospect in the Canje Block in the Guyana-Suriname basin. The well, located in 2846 m of water, was drilled to its planned target depth of 6690 m using drillship Stena Carron. Data collection from the Bulletwood-1 well confirms the presence of the Guyana-Suriname petroleum system and the potential prospectivity of the Canje Block, said partner Westmount Energy. Bulletwood-1 was the first of three scheduled wells to be drilled on the block in 2021. Wells Jabillo-1 and Sapote-1 are expected to spud over the coming months. Exxon operates the Canje Block via its Esso Exploration and Production Guyana unit, which has a 35% stake. Total has 35%, JHI 17.5%, and Mid-Atlantic Oil & Gas 12.5. Westmount holds a 7.7% stake in JHI. While the well results were disappointing, Exxon’s success rate in the area is still around 80% from 18 wells and expects its production from the region to reach 750,000 B/D by 2026. Neptune Earmarks $150 Million for Exploration and Appraisal in 2021 UK-based independent Neptune Energy said its exploration and appraisal spend for 2021 will remain flat at around $150 million. The company said it had up to 11 wells planned for the year including followup wells at the Dugong and Maha discoveries as well as a wild-cat at Dugong Tail. Dugong was discovered in the Norwegian portion of the North Sea in 2020. Neptune believes the prospect holds between 40–120 million BOE. Dugong is located 158 km west of Florø, Norway, at a water depth of 330 m, and is close to existing production facilities. The Dugong prospect comprises two reservoirs that lies at a depth between 3250–3500 m. The Maha discovery offshore East Kalimantan is estimated to hold gas resources in excess of 600 Bcf. In 2019, Neptune and its partners, Eni (operator) and Pertamina, were awarded the West Ganal production-sharing contract that holds the Maya find. An exploration well targeting the Dugong Tail prospect, adjacent to the south of the Dugong find, is slated for the third quarter of this year and will be drilled using Odjfell semisubmersible Deepsea Yantai. Interest Wanes in Norway’s Arctic Frontier Seven companies applied for new acreage in the Barents Sea in Norway’s latest licensing round, down from 26 in a similar round in 2013. The government had offered 125 new blocks in eight frontier regions of the Barents. More than 60% of the undiscovered hydrocarbons offshore Norway are in the Barents frontier, according to the nation’s petroleum directorate. However, appetites for frontier drilling have diminished as oil prices weakened and recent results from the region have disappointed. Companies that applied for the new acreage round were Norske Shell, Equinor, Idemitsu Petroleum Norge, Ineos E&P Norge, Lundin Norway, OMV Norge, and Var Energi. Oman Transfers Ownership of Massive Block 6 The government of Oman has transferred its stake in one of the Middle East’s largest oil blocks to a newly established firm. By royal decree, the new, state-controlled Energy Development Oman (EDO) will hold the country’s 60% stake in Block 6. The stake was moved from Petroleum Development Oman (PDO), another government-run company. Oman, which is struggling under a soaring budget deficit, is looking to finance its spending by leveraging its energy assets. Block 6 has a production capacity of 650,000 BOED. Shell holds 34% in the block, while Total holds the remaining 4%. The government appointed Haifa Al Khaifi as head of EDO in January. She joined from PDO and is also chairwoman of the Saudi Arabian unit of State Street Corp., the Boston-based custodian and money manager. EDO will also be able to invest abroad and deal in renewable-energy products.

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