Thursday, January 20, 2005

Barry Morgan: Awards Again Delayed

Writing in UpstreamOnline, veteran oil industry journalist Barry Morgan said awards in the Nigeria-Sao Tome and Principe Joint Development Zone no longer seem likely to occur in January as promised by Dr. Edmund Daukoru, petroleum advisor to President and Petroleum Minister Olusegun Obansanjo, but would be delayed two more days.

While Morgan suggested the awards might come immediately following the signing of a Production Sharing Contract on Feb. 2 between the JDZ and Block 1 winners ExxonMobil, ChevronTexaco and Energy Equity Resources, the signing may in fact be holding the awards hostage.

There was no indication the Feb. 2 date was a certainty. Another possible date advanced was Feb. 4, also the day ERHC shareholders will meet in Houston to consider two proposals by the company for employee stock compensation plans and a name change to ERHC Energy.

The new hint of a delay occasioned some groaning on the Raging Bull ERHC message board, but not much. It remains unclear how much lower the stock may go on a new delay, however, and as it goes lower the prospect for a substantial price after the awards falls with it.

It is clear from news reports in recent delays that the entire process is at risk due to ExxonMobil's reluctance to participate as expected.

Morgan reported:

Block-1 will likely be signed on 2 February in Sao Tome during ceremonies presided over by President Fradique de Menezes hosting his counterpart from Abuja, President Olusegun Obasanjo. Since several key players in the Nigerian industry and administration are Muslim, these arrangements have had to wait till after the Hajj, or annual pilgramage to Mecca, sources indicated.

While intensive meetings were this week scheduled between the Joint Development Authority, ExxonMobil, Pioneer Natural Resources and Anadarko Petroleum, it was clear at presstime that the US supermajor still had not fixed a farminee for its preferential 25% equity rights to JDZ blocks 2 and 4.

Moirgan also noted that an attempt by "one US mid-sized player" to have terms of its bid revisited was rebuffed by Nigerian authorities.

That description may fit either Anadarko Petroleum or Devon Energy. Both placed a bid of $40 million, $1 million lower than that of Energy Equity Resources (a Block 1 winner) in Block 3.

Devon is partnered with Pioneer Natural Resources in the bid, and Pioneer has a Memorandum of Understanding with ERHC that they will negotiate and develop the block together as bids go forward.

Anadarko is "mid-sized," too, at $76 billion in assets compared to giants like ExxonMobil and ChevronTexaco.


3 comments:

Anonymous said...

Joe continues to post with a negative spin on the article. Here's another way to interprete Morgan article - it mentions intense meeting this week between Pioneer and JDZ. This is all I need to pick an additional truckload today.

Anonymous said...

Joe what block did Devon bid lower by $1 Million they bid the "same" for BL 3 - other sources indicate it was Anadarko who wanted to revisit their bid

you are NOT trying to spin this to the negative are you?

JDZ Block-2 (seven bids)
Vintage Oil and Gas ($135 million)
Continental Oil and Gas ($120 million)
A & Hatman ($80 million)
Foby Engineering ($73 million)
Momoh Petroleum ($65 million)
Equator Exploration/ONGC Videsh ($65 million)
Devon/Pioneer (Ocean Energy Limited) / ERHC ($50 million).

JDZ Block-3 (six bids)
Energy Equity Resources $41million.
Devon/Pioneer (Ocean Energy)/ ERHC, ($40 million)
Anardako Petroleum Corporation ($40 million)
Sahara Energy Fields ($37.5 million)
Ophir Energy ($36 million)
Equinox Oil & Gas ($35 million)

JDZ Block-4 (ten bids)
ECL International $175million
Conoil Producing ($150 milion)
Anardako Petroleum Corporation ($90 million)
Hercules Oil/Centurion Energy/Stratar Energy Consortium ($81 million)
Atlas Petroleum ($70 million)
Energy Equity Resources ($67 million)
Overt Ventures, Equator Exploration Limited ($60 million)
ONGC Videsh and Godsonic Oil ($60 million
Noble-(ERHC) ($57.285 million)

JDZ Block-5 (two bids)
ICC-OEOC Consortium ($37 million)
Sahara Energy Fields ($35 million)

JDZ Bloch- 6 (one bid)
Filtim Huzod Oil & Gas ($45 million)

Winners of the bids would be validated by the JDA without prejudice to the rights to any of the blocs already exercised by ERHC and ExxonMobil which have pre-emptive rights in the zone.

...Joe Shea said...

I stand corrected. Devon and Anadarko both bid $40 million and were outbid by $1 million by Energy Equity Resources, a Block 1 winner. And thanks for posting the list of bids for reference; when I tried to check this, I couldn't find it and was forced to rely on faulty memory.

Do I feel this article was a negative? Yes, I do. It's just that you can only have so many delays and disappointments. As they say in Hollywood, February is the new January. But that doesn't mean that smart buyers won't accumulate, and that smart sellers didn't take profits on the climb-down. I did not.