Sunday, 20 June 2010 (Source: TB Petroleum)
Tanzania. Recent activity in East Africa could spur
further interest for newcomers and existing oil operators to increase
their position in the region, according to sector players and
participants interviewed by mergermarket.
Alongside further farm-in agreements, M&A is also likely,
with companies like Orca Exploration, Aminex, Cove Energy, Dominion
Petroleum and other Toronto, London and Australia-listed businesses seen
as good acquisition targets. Some groups with an East African presence
that could also be targets include Centric Energy and Lion Energy, a
sector analyst said.
Cairn Energy, Premier Oil and Tullow Oil are rumored to be actively pursing acreage in the region at present, added a banker.
Sector majors and independents like BG Group, Statoil,
ExxonMobil, Petronas, Anadarko, Africa Oil Corporation, Shell, ENI and
Beach Energy (which itself could prove an attractive target) and several
Asian oil companies could also look to increase their investments in
the region, either acquisitively or through farm-ins, sector
participants added.
Proven discoveries encourage new investments
East Africa is still seen to be a region significantly
underdeveloped in oil and gas activities, compared to the Western part
of the continent, an ex-Total sector executive acquainted with the
region explained. However, the past “success stories” in the region are
encouraging sector players to snap up assets and establish their
positions, he added.
According to W. David Lyons, the chairman and chief executive of
listed Orca Exploration, which has gas assets in Tanzania, the past 18
months have been especially active for regional investments.
Tullow Oil’s acquisition of Heritage Oil’s assets in partnership
with CNOOC and Total in Uganda for some GBP 1.5bn (EUR 1.8bn) has become
the price guideline for assets in the region, a UK-based sector analyst
said. Also, successful drilling campaigns in the region, like the one
by Anadarko in Mozambique, are encouraging investors to make further
investments.
Anadarko this February announced the results of its first
deepwater discovery offshore Mozambique, which industry sources said
could be a multi-billion TCF discovery.
Anadarko’s discovery is understood to have attracted BG Group to
make its first big move in the region. BG has farmed into the assets of
Ophir Energy in Tanzania, which are based southeast from Anadarko’s
Windjammer discovery. BG is planning its first exploration in the region
towards the end of this year, its spokesperson told this news service.
Two other Tanzania-based players, Aminex and Orca Exploration,
are also seen as attractive takeover targets in the short-to medium
term. Again, both companies have neighboring assets.
Orca’s CEO told this news service the company is hoping to double
its size on the back of a drilling campaign planned for summer of next
year.
Orca Exploration, which says it is the only gas producing company
in Tanzania so far (it has been present in the country for 15 years and
in production for six years), currently has 1,236 Bcf in Proved and
Probable (2P) Gas Initially in Place in the Sogo Sogo project, with
remaining recoverable 2P reserves of 689 Bcf, according to the company’s
website. The CEO said that every one out of two drilled wells in the
region could be successful. The company is currently has a market cap of
CAD 123.9m (EUR 95.4m). The analyst following said the company is
undervalued at present, as the markets are not giving it credit for the
exploration assets.
Orca could be a logical target for businesses seeking easy access
to the region, a sector banker said. However, with the CEO holding more
than a 25% stake, this would be a natural obstacle to any deal.
Aminex was also pointed out by two bankers as a potential target.
UK and Irish-listed Aminex has a current market cap in the range of GBP
30.95m, with a share price of around 7.50p. Its brokerage’s equity
house, however, said the company’s net asset value would be reflected in
a 26p per share price.
In the next year, the company might need to look to raise funds
for the development of its Ruvuma license in Tanzania, it was said. A
farm-out agreement could be a logical option, it was added. The company
could not be reached for an immediate comment.
“I think every single one of the majors that has already some
acreage there [in East Africa] is looking for more opportunities to
invest”, said the first banker.
Dominion Petroleum, with assets in Central and Eastern Africa,
was rumored in the press to be a takeover target for one of the majors
given its relatively low share price. The company’s current market cap
stands at GBP 90.3m.
Cove Energy, with assets in Mozambique, was also mentioned as a
takeover target by this news service in December last year. A banker
close to the company said that “it is just a matter of time and money
for this deal to happen,” claiming that as a junior, Cove could listen
to good offers. The company has a GBP 199.8m market cap.
