AAOG Inches Closer to Monetization of Congo Project

November 13, 2019

The Republic of Congo’s oil blocks (Image: Ministry of Hydrocarbons)
The Republic of Congo’s oil blocks (Image: Ministry of Hydrocarbons)

Independent oil and gas developer Anglo African Oil & Gas, (AAOG) has tentatively confirmed its drilling work plan for the offshore Tilapia oil field’s TLP-103C well sidetrack, in the Republic of Congo where the company holds a controlling 56% stake, an indication the earlier proposed monetization program is inching closer to realization.

The confirmation follows AAOG’s November 12 announcement of the agreement signing with Société de Forage Pétroliers (SFP), a subsidiary of Congolese State Oil Company, Société Nationales des Pétroles Congolais (SNPC), for the provision of a rig to carry out drilling operations and the right of AAOG to contract the rig for TLP-103C-ST and a further four wells.

Earlier in August 2018, AAOG, which has partnered in the Tilapia oil field with SNPC with a 44% stake, had drilled the TLP-103C well to depths of 2,683 meters with the SMP rig, encountering 56 meters of oil columns including 26 meters of the Mengo formation and a further 12 meters in the deeper Djeno formation. The hydrocarbons indicators informed the company’s decision to commence plans for the drilling of the TLP-103C-ST.

However, AAOG said this week because the SFP #1 Rig is currently contracted to a super-major until December 30, 2019, the contractual obligations between AAOG and SFP may be extended until, but not beyond March 30, 2020.

AAOG said SFP “will notify AAOG on or before November 30, 2019 as to whether its contractual commitments have been extended.”

“Drilling operations at TLP-103C-ST could therefore commence either in Q1 or Q2/2020, dependent on the Rig's current commitments,” said AAOG, which owns the 50 square kilometers Tilapia oil field through its wholly owned subsidiary of Petro Kouilou.

The company said the operational plan entails the re-entering of the existing TLP-103C well to “drill the new sidetrack just below the Mengo formation to test the Upper Djeno and explore the Middle Djeno formations to determine whether the Djeno can be brought into production from either horizon.”

“The rig is the most suitable rig available in country and will come to TLP-103C-ST directly from drilling operations for a super-major,” said James Berwick, CEO AAOG.

“The board of AAOG appreciate that drilling operations will commence later than we had hoped but, following the problems encountered in drilling TLP-103C, it was important that we found the right rig for this drilling campaign to avoid any similar issues," he added.

AAOG’s optimism on the viability of the Tilapia oil field investment was fueled further early in the year when the TLP-103C well results turned positive hence pushing the company to shift focus on the drawing up of a comprehensive forward plan to monetize the discovery in the Djeno at the earliest opportunity.

“With an operational team in place and a funding package finalized, the team is now concentrating on signing a rig contract for the sidetrack into the Djeno,” said Sarah Cope, Non-executive chair, in September, more than two months before this week contract signing.

Part of the financing AAOG has been receiving includes $4 million from the SNPC, which started making payments in March this year, breaking the history of AAOG’s self-financing record.

“At current oil prices, a daily production rate of, say, 500/bopd from the Mengo would generate material levels of cash flow for AAOG,” the company said in June.

“The combination of the low-risk production story provided by the shallower R1/R2/R3 and Mengo formations, and the significant exploration upside potential offered by the Djeno, is what has attracted us to Tilapia in the first place,” it added.

The Republic of Congo, which last year unveiled 10 shallow, deep and ultra-deep offshore blocks for sale, is seeking additional upstream investments especially from international oil companies as the country strives to overcome impacts of the recent global economic challenges that may have delayed decisions to explore hydrocarbons not only in Africa but globally.

Despite the delays AAOG encountered in its 2019 investment and work plan, the company is hopeful it will deliver on the Tilapia project according to Berwick.



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