Western oil companies have been exploring Nigeria, Africa’s top crude oil producer, for decades with exceptional success so perhaps it shouldn’t come as much of a surprise that Afren (AFR), a leading independent oil producer in the country, has discovered a “giant” new field there.
The Africa-focused exploration and production company says its Ogo prospect in the OPL 310 licence offshore Nigeria is now estimated to contain 774m barrels of oil equivalent (mboe) recoverable resources, up from earlier expectations of 202mboe. Afren owns a 40 per cent interest in the block while Aim-listed Lekoil (LEK) also holds a 30 per cent stake. Analysts at UBS said: "The discovery looks to be one of the most important made in West Africa in recent history and to describe it as ‘transformational’ would not be hyperbole."
The Ogo discovery helps support a theory that prospects along the West African Transform Margin regularly host major new hydrocarbon deposits; the Ogo find was made in the same type of Cretaceous play that has yielded other significant discoveries along the trend in recent years, including Tullow Oil’s (TLW) flagship Jubilee field offshore Ghana and major oil fields in waters off the Ivory Coast and Sierra Leone. Nearly a dozen leading oil groups are set to drill exploration wells offshore Morocco over the next two years as it is thought the trend could extend all the way to North Africa too.
Nigeria and other African nations have struggled with onshore oil theft and misappropriation in recent years and the push towards offshore assets is seen as a safer option for Western oil groups operating on the continent. But as a result, conventional onshore fields in Africa can offer decent value as shares in Heritage Oil (HOIL) suggest. Heritage and some local Nigerian partners acquired one of Shell’s (RDSA) largest onshore licences, OML 30, last year and have been busy pumping oil out of the ground at impressive rates.
After a blip in the second quarter, when production missed targets due to a strike by local workers and some technical problems with a gas lift compression system, output is now rising. Heritage says gross oil production remains on target to exit the year at 50,000 barrels per day, up from 35,000 bopd earlier this year. The company’s share of production this year is anticipated to average 11,000 bopd and further development drilling next year should bring this up to a range of 16,000 to 21,000 bopd.
