Interim Statement for the period ended 30 June 2016
The main focus of Petrel in the period under review was on activity in the Irish Atlantic Porcupine Basin:
Petrel has a 15% carried interest in two Frontier Exploration Licences, FEL 3/14 and FEL 4/14, which total 1,050km2 and are operated by 85% holder Woodside Energy.
Petrel recently applied under the 2015 Bid Round and was awarded an additional two Licensing Options, LO 16/24 and LO 16/25. Petrel operates and owns these Licensing Options 100%.
During that Irish Atlantic Bid Round, 17 companies applied for 46 Licensing Options - the most successful Irish Bid Round yet. Among the successful companies were Exxon-Mobil, Statoil, ENI, Nexen-CNOOC and Woodside.
Joint Venture with Woodside Energy in the Irish Atlantic Porcupine Basin
The 'Bréanann' 3D seismic acquisition programme was successfully completed over c. 2,392km2 of the northern Porcupine Basin, 150km west off the Kerry coast, south-western Ireland. Water depth of the survey was 500m to 1,300m, but likely water depth for Petrel's targets is likely to be 600 to 800m.
The state-of-the-art 3D seismic was acquired over 40 days with PGS as contractor. Circa 1,400km2 is directly over or around FEL 3/14, in which Petrel has a 15% carried interest.
Processing of the (Pre-Stacked Depth Migration) seismic data is now underway at the DownUnder GeoSolutions (DUG) operation in Australia. We expect early results in January, with interpretation complete by mid-2017.
This work is intended to de-risk the identified primary targets of Upper Jurassic to Lower Cretaceous age, which may lead to one or more well commitments in the phase 2017 through 2021. Petrel is fully carried on the expenditure.
2015 Irish Atlantic Bid Round
Petrel was been awarded 924 km2 of prospective Irish Atlantic Porcupine Basin acreage in June 2016 by way of two Licensing Options.
We obtained our priority bid, Licensing Option 16/24, including 664 km2 bordering the Connemara oil-field discovered by BP in 1983.
The Licensing Option 16/24 work programme is now underway with the acquisition of relevant available seismic and well data not already in Petrel's database. These North-Western Porcupine Basin blocks are a priority, giving the best opportunity at a quality farm-out in a challenging environment. We are particularly encouraged at pinch-outs being mapped in our priority 35/1 area which extend into 35/2. The source rock is already established, as is the presence of good to excellent reservoir sands. The main risk is seal.
Ghanaian Tano Acreage
The Ghanaian Ministry of Energy and the Ghanaian National Petroleum Commission are actively considering the current re-application by Pan Andean Resources Ltd (30% Petrel, 60% Clontarf, 10% local interests) over a licence block in the prospective Tano Basin, West Africa.
There is a long drawn out process in relation to an agreement reached in 2010 but not implemented. In 2014, we agreed to withdraw a court case to force the Ghanaian authorities to respect our signed Petroleum Agreement. There was a dispute over the coordinates of our acreage. Following discussions with the Ghanaian authorities, we were offered new, and in our opinion improved, co-ordinates. As announced on 19 September 2016, we have accepted the new acreage in principle. We now move into negotiation of the licence terms and look forward to providing shareholders with further updates in due course.
This acreage seems more prospective than the deep-water acreage the technical team recently reviewed. It combines the medium water attractions of recent nearby discoveries with potential for pinch-outs up-dip of those producing discoveries.
Despite past delays, there seems to be a renewed urgency and flexibility in discussions, though there can be no guarantee of a positive outcome given the need for all Petroleum Agreements to be ratified by the Ghanaian Cabinet and Parliament.
Iraqi Turbulence Continues
Petrel holds a 5% carry through to production on any commercial production achieved by Oryx, a Canadian listed company, in the Wasit province, Iraq. Iraq has experienced another year of political and economic turmoil. Production from southern fields has continued to creep upwards to circa 4.35 million barrels daily (mmbod), despite infrastructural and decision-making challenges. This production serves internal demand of 0.8mmbod, leaving c. 3.55mmbod available for export. This is about 20% more than the pre-2003 output under sanctions, but well short of Iraq's potential.
The Western Desert, where Petrel has an interest in exploration ground, is impossible for international companies to operate in. Neither Wasit nor provincial contracts have been a priority for the Iraqi federal government over the past year. Nonetheless, Wasit (situated east of Baghdad) continues to be relatively quiet by the standards of the region, with a limited number of reported incidents.
We are encouraged that the Iraqi Government now plans to develop a small Wasit refinery, with a design capacity of 0.15mmbod, which would provide a local market for any output. Oil is already being produced at the nearby Ahdab oilfield, operated by China National Petroleum Corporation, and Badra field operated by Gazprom Neft, both in Wasit.
Future
Since 2014 the hydrocarbons industry has had to weather severe storms. Costs have been slashed - as has exploration. But so far, our key Atlantic Joint Venture has not been adversely affected. On the contrary, the recent Irish Bid Round attracted a record 46 applications from 17 companies, including Exxon-Mobil, Statoil, Woodside and Nexen/CNOOC. This surge in international interest has already boosted 3D seismic programmes and will in time, we hope, lead to wells and discoveries. It is an exciting time to be in the Porcupine Basin. Petrel is funded for current activities.
Petrel recently applied under the 2015 Bid Round and was awarded an additional two Licensing Options, LO 16/24 and LO 16/25. Petrel operates and owns these Licensing Options 100%.
During that Irish Atlantic Bid Round, 17 companies applied for 46 Licensing Options - the most successful Irish Bid Round yet. Among the successful companies were Exxon-Mobil, Statoil, ENI, Nexen-CNOOC and Woodside.
Joint Venture with Woodside Energy in the Irish Atlantic Porcupine Basin
The 'Bréanann' 3D seismic acquisition programme was successfully completed over c. 2,392km2 of the northern Porcupine Basin, 150km west off the Kerry coast, south-western Ireland. Water depth of the survey was 500m to 1,300m, but likely water depth for Petrel's targets is likely to be 600 to 800m.
The state-of-the-art 3D seismic was acquired over 40 days with PGS as contractor. Circa 1,400km2 is directly over or around FEL 3/14, in which Petrel has a 15% carried interest.
Processing of the (Pre-Stacked Depth Migration) seismic data is now underway at the DownUnder GeoSolutions (DUG) operation in Australia. We expect early results in January, with interpretation complete by mid-2017.
This work is intended to de-risk the identified primary targets of Upper Jurassic to Lower Cretaceous age, which may lead to one or more well commitments in the phase 2017 through 2021. Petrel is fully carried on the expenditure.
2015 Irish Atlantic Bid Round
Petrel was been awarded 924 km2 of prospective Irish Atlantic Porcupine Basin acreage in June 2016 by way of two Licensing Options.
We obtained our priority bid, Licensing Option 16/24, including 664 km2 bordering the Connemara oil-field discovered by BP in 1983.
The Licensing Option 16/24 work programme is now underway with the acquisition of relevant available seismic and well data not already in Petrel's database. These North-Western Porcupine Basin blocks are a priority, giving the best opportunity at a quality farm-out in a challenging environment. We are particularly encouraged at pinch-outs being mapped in our priority 35/1 area which extend into 35/2. The source rock is already established, as is the presence of good to excellent reservoir sands. The main risk is seal.
Ghanaian Tano Acreage
The Ghanaian Ministry of Energy and the Ghanaian National Petroleum Commission are actively considering the current re-application by Pan Andean Resources Ltd (30% Petrel, 60% Clontarf, 10% local interests) over a licence block in the prospective Tano Basin, West Africa.
There is a long drawn out process in relation to an agreement reached in 2010 but not implemented. In 2014, we agreed to withdraw a court case to force the Ghanaian authorities to respect our signed Petroleum Agreement. There was a dispute over the coordinates of our acreage. Following discussions with the Ghanaian authorities, we were offered new, and in our opinion improved, co-ordinates. As announced on 19 September 2016, we have accepted the new acreage in principle. We now move into negotiation of the licence terms and look forward to providing shareholders with further updates in due course.
This acreage seems more prospective than the deep-water acreage the technical team recently reviewed. It combines the medium water attractions of recent nearby discoveries with potential for pinch-outs up-dip of those producing discoveries.
Despite past delays, there seems to be a renewed urgency and flexibility in discussions, though there can be no guarantee of a positive outcome given the need for all Petroleum Agreements to be ratified by the Ghanaian Cabinet and Parliament.
Iraqi Turbulence Continues
Petrel holds a 5% carry through to production on any commercial production achieved by Oryx, a Canadian listed company, in the Wasit province, Iraq. Iraq has experienced another year of political and economic turmoil. Production from southern fields has continued to creep upwards to circa 4.35 million barrels daily (mmbod), despite infrastructural and decision-making challenges. This production serves internal demand of 0.8mmbod, leaving c. 3.55mmbod available for export. This is about 20% more than the pre-2003 output under sanctions, but well short of Iraq's potential.
The Western Desert, where Petrel has an interest in exploration ground, is impossible for international companies to operate in. Neither Wasit nor provincial contracts have been a priority for the Iraqi federal government over the past year. Nonetheless, Wasit (situated east of Baghdad) continues to be relatively quiet by the standards of the region, with a limited number of reported incidents.
We are encouraged that the Iraqi Government now plans to develop a small Wasit refinery, with a design capacity of 0.15mmbod, which would provide a local market for any output. Oil is already being produced at the nearby Ahdab oilfield, operated by China National Petroleum Corporation, and Badra field operated by Gazprom Neft, both in Wasit.
Future
Since 2014 the hydrocarbons industry has had to weather severe storms. Costs have been slashed - as has exploration. But so far, our key Atlantic Joint Venture has not been adversely affected. On the contrary, the recent Irish Bid Round attracted a record 46 applications from 17 companies, including Exxon-Mobil, Statoil, Woodside and Nexen/CNOOC. This surge in international interest has already boosted 3D seismic programmes and will in time, we hope, lead to wells and discoveries. It is an exciting time to be in the Porcupine Basin. Petrel is funded for current activities.