Azonto Petroleum Limited provides Operations Update
Azonto is pleased to provide the following operations update for its assets in Cote d’Ivoire and Ghana.
CI-202, Cote d’Ivoire
Vioco Petroleum Limited (“Vioco”), Azonto’s 35% owned affiliate is the operator of Block CI-202. Azonto’s partner Vitol E&P Limited (“Vitol”) holds the remaining 65%.
The project team assembled by Vioco (supported by certain employees from both Azonto as well as Vitol) has made excellent progress in preliminary engineering activities in relation to the development of the Gazelle gas project. These include the offshore platform, a multiphase pipeline to shore, and gas processing facilities. Similar good progress has been made in discussions with the State owned electricity company, CI-Energies, the proposed gas buyer in respect of the gas sales agreement.
Less progress than anticipated has been made in recent months in regard to the proposed gas pipeline from Grand Bassam to Abidjan where the current installed thermal power capacity is located.
Consequently, it has not been possible to progress certain activities, such as detailed discussions with financial institutions (including the World Bank group), to a level that would enable a Final Investment Decision (“FID”) to be taken by Vioco in 1H 2014, as had previously been anticipated.
The base case for the project remains supply of gas via pipeline to Abidjan; however Vioco continues to evaluate temporary power generation at Grand Bassam as a potential interim solution and is currently in active discussions with CI-Energies on this option that Vioco believes is being considered favourably.
Based on recent indications from Vioco, Azonto is confident that FID will be taken before the end of 2014, with first gas following between 16 and 18 months thereafter (by mid 2016). Vioco’s subsurface team is also reviewing the existing discoveries (e.g. Addax, Hippo, Bubale) and additional prospects on the Block with a view to identifying the optimum shallow water prospect for exploration drilling in conjunction with the Gazelle development drilling campaign. Discussions continue regarding how best to pursue potential drilling of the exciting deeper water prospects identified in the Block (e.g. Arius).
Accra Block, Ghana
Further to the ASX announcement made on 26 March 2014, Azonto Petroleum (Ghana) Limited (57% Azonto Petroleum Ltd / 43% Vitol E&P) (“Azonto Ghana”) has been granted a six month extension to the current exploration period which now extends to 23 September 2014. During the extension period, Azonto Ghana will be working closely with its Joint Venture partner Afex Oil (Ghana) Limited (“Afex Ghana”) alongside GNPC (which holds a 10% carried interest in the Block) to further explore the potential of the Block.
Both Ophir Energy Limited and TAP Oil Limited have announced in separate releases that they have elected to withdraw from the Contractor Group, although this remains subject to Government approval. Assuming the Government approves the withdrawals, Azonto Ghana and Afex Ghana will each hold an effective 45% working interest (50% paying interest) in the Block. Given Ophir’s intention to withdraw, Azonto Ghana is acting as Operator during the Extension Period.
As advised in March 2014, notwithstanding the results of the recent Starfish-1 well, which appears to have penetrated an Albian aged stratigraphic reservoir (as opposed to the Cenomanian-Turonian age predicted prior to drilling), there is evidence of possible residual oil in those sands, but more importantly a number of further high potential opportunities have been identified within the Block based on detailed interpretation of the previously acquired 3D seismic. These include prospects in both the shallow water syn-rift Albian play and also in the deeper water Cenomanian/Turonian turbiditic and hinge-line plays.
Initial re-mapping work by Azonto Ghana has focused on the Sealion complex in the south western part of the Block that contains a number of structural as well as stratigraphic traps in water depths of between 1,650 and 1,880 m. Five horizons have been mapped in the complex with a combined P50 trap area of some 216 km2 and estimated gross unrisked P50 recoverable resources of some 2.2 billion barrels.
Azonto Ghana and Afex Ghana have initiated a process to seek additional partners before electing to move into the next exploration period on or before 23 September 2014 in order to obtain an exposure to this high impact Block that reflects the size and strategy of our Company. Whilst there can be no assurance these efforts will be successful, initial interest from potential partners has been encouraging.
Commenting on today’s announcement, Azonto’s Managing Director, Mr. Rob Shepherd said:
“We would obviously like to have seen more tangible progress on the aspects of the overall Gazelle project that are largely outside of Vioco’s control, however we remain confident that progress will continue to be made. The CPR we released earlier in May highlights the value to Azonto of the development progressing and, given the compelling economic logic for the Government in Cote d’Ivoire to replace expensive fuel oil with gas, we believe it is in the interest of all parties to see the Gazelle project brought on stream. As such, we, and our partner at Vitol, are confident that we will be in a position to achieve FID by the end of the year.
Separately, the initial work our geoscience team has been doing on the Accra block is extremely encouraging and so, whilst there can be no assurance we will be successful in finding a partner to support the next period of exploration there, our ability to do so could create material value for our shareholders and the extension therefore represents a highly compelling and low cost opportunity for us to pursue.”