Privately held oil and gas exploration and production company New Age (African Global Energy) Limited has announced the completion of the US$800 million sale of its 25% non-operated interest in the offshore Marine XII permit in Congo (Brazzaville) to LUKOIL Upstream Congo SAU, a wholly owned subsidiary of PJSC LUKOIL.
The confirmation comes more than two months after New Age, which entered the permit in 2009, announced reaching a deal with LUKOIL for the license which is operated by Italian oil giant Eni. The deal, which involved a competitive sales process, required customary conditions such as the approval by the Government of the Republic of Congo and which appears to have been granted.
Completion of the transaction coincides with successful appraisal and phased development that “have led to early production being established from both the Nene and Litchendjili fields”.
“The sale of New Age’s position in Marine XII marks the culmination of a successful investment cycle for the Company,” New Age said in a statement early this week.
The London-based firm, which also has operations in South Africa, Cameroon, Nigeria and Ethiopia said proceeds from the transaction with LUKOIL will be used to “further strengthen its balance sheet and to redeploy into its African portfolio, including the Marine III licence in the Republic of Congo, the Etinde licence in Cameroon and its exploration assets.”
Earlier in June, New Age said since the company entry into Marine XII there have been multiple large oil and gas discoveries with “successful appraisal and phased development have led to early production being established from both the Nene and Litchendjili fields.”
New Age holds a 75% operated interest in Marine III, which lies adjacent to Marine XII where it has partnered with Société Nationale des Pétroles du Congo, the Congolese national petroleum company.
“This sale highlights the success of our strategy of identification and early entry into under-valued proven acreage with upside potential,” said David Stoopin, CEO, NewAge when he announced the sale in June.
“The Republic of Congo continues to be a key area of operations for New Age and the knowledge and understanding that we have gained from Marine XII will be applied to our work program in the neighboring block Marine III, where we have a high level of equity and are the operator,” he added.
Conclusion of the Marine XII sale by New Age comes at a time when the company is planning further conventional 3D seismic and an exploration well on the cards during the 2019/2020 period with an additional appraisal well in the Marine III block also approved.
“The first exploration well is due to be drilled before the end of 2020, targeting the same reservoir horizons that have already been successfully developed in Marine XII,” the company said.
Congo (Brazzaville), sub Saharan Africa's third largest oil producer and which previously reiterated its desire to “further develop [its] mining sector to ensure the renewal of reserves of liquid and gaseous hydrocarbons,” launched its second phase of promotion of 10 coastal basin offshore blocks in shallow, deep and ultra-deep water.
Fast-tracking of Congo’s upstream development program is critical for the country’s effort to supplement production at mature fields and “recover the declining hydrocarbon reserves as more production wells mature.” The country has an estimated 1.6 billion barrels of proved crude oil reserves.
“Over the past few years, oil production decreased as a result of natural declines at mature fields,” says US’ Energy Information Administration (EIA).
“A few deepwater projects are slated to come online in the next five years, but in the near term oil production is expected to continue to fall,” added EIA.
Currently, Total and Eni, which have been present in Congo Brazzaville, since 1968, are the leading hydrocarbon producers accounting for nearly three-fourths of the country’s total oil production, according to EIA.