Oil and Gas Development - Case Study Example

Oil and Gas Development Introduction The petroleum industry has within it processes all the way from exploration, extraction, refining, transport and the marketing of petroleum products. Petroleum is important to many an industry and is vital in the maintenance of industrial civilization in the configuration it is in today and is therefore of critical concern to many countries. Oil does in fact account for a significant percentage of the world’s energy consumption. This ranges from Europe’s 32 per cent to 53 per cent for the Middle East. Many regions in the world have been exploited for this resource among them is West Africa and South America. This paper will discuss some key points on these regions by discussing the dynamics of petroleum companies located in said regions, their data on oil production, as well as the future of production. It will also provide some background on the companies as well as some insight useful for investment. Range Resources Limited is an exploration and Production Company that is dual listed and has a diverse portfolio when it comes to gas and oil assets and has a strategic focus on Trinidad where Range Resources holds 100 per cent interest in about three production licenses. The company also has interests in Guatemala, Somalia, Colombia, Puntland, Texas, USA and in the Republic of Georgia. In Trinidad, the company has six operational drilling rigs plus further completion rigs and operational personnel (David et al., 67). Chariot Oil and Gas Limited is an independent gas and oil exploration company that is focused in creating transformational value for stakeholders through discovery of hydrocarbon mineral accumulation. The company has four licenses that cover eight blocks of offshore Namibia, one covering offshore Mauritania, three licenses offshore Morocco, and four offshore Brazil licenses. The company doubled its portfolio over the last 18 months and currently holds acreage of about 60,000km2. Prospective regions include frontier and emerging basins as well as established ones. The company has prospects in Brazil which are promising owing to the country’s potential and political stability. The company’s areas of interest, BAR-M-292, BAR-M0293, BAR-M-313 and BAR-M-314 are in the north-eastern part of offshore Brazil in the Barreirinhas Basin (David et al., 67). Bowleven plc is also an oil and gas exploration group which has assets in West Africa, specifically, onshore as well as offshore Cameroon and onshore Gabon. The company’s onshore Cameroon acreage does in fact sit adjacent to the acreage of Logbaba gas field which is owned and operated by the company trades as LSE: BLVN. The African based oil and gas group has interests in Kenya as well. It has interest in many unexplored areas which makes it attractive to potential investors due to the high chances of finding oil and gas in these unexplored areas. It is good to note that the company is focused on positive aspects such as raisin awareness on ethical, environmental, and social matters in the communities it operates in (David et al., 43). Boarders and Southern petroleum plc is another independent gas and oil exploration company. The company operates in the Falkland Islands. It has 100 per cent interest as well as operatorship in three production lines that cover an area of about 10,000 square kilometers. The islands are located in the South Atlantic about 500 kilometres from South America’s mainland. In 2012, the company managed to complete a drilling program that involved two wells which raised $75 million (gross). The first well brought a gas concentrate discovery while the second had strong shows of gas. In 2012, the company relinquished 50 per cent of its acreage and began the second term of exploration under its license. The company maintains strong focus on technical vigor, corporate responsibility, and commercial discipline. This, coupled with the success of its initial exploration has attracted many an investor and continues to attract investors to this day. (David et al., 112). Rockhopper Exploration plc, an AIM listed gas and oil Exploration Company is based in the United Kingdom. The company was established in 2004 with the aim of investing and undertaking an offshore exploration program. The company now holds 40 per cent interests in licenses PLO33 and PLO32 upon the completion of a farm-in that was announced in 2013, October. It also has 24 per cent stakes in blocks operated by Premier Oil and 3 percent in one block operated by Desire petroleum. The licenses are in the North Falkland basin which is located in the waters north of the islands. The Ocean Guardian drilling rig carried out a multiwall program on behalf of many operators in 2010. Rockhopper drilled a well on the Sea Lion and struck oil. (David et al., 178). Ophir Energy plc is a London based Oil and Gas Exploration Company that operates in West Africa. It was founded by Jonathan Taylor and Alan Stein in2004 with financial backing from Tokyo Sexwale. The company has projects in different regions in Africa such as Congo, Sahrawi Arabian Democratic republic, Equatorial Guinea, and Senegal. In 2014, the company sold 20 per cent stake in its assets in Tanzania for $1.2 billion. Majority of Ophir’s assets are in deepwater. The company is a material and a strategic offshore acreage holder in both East and West Africa (David et al., 143). Though the company mostly focuses in deepwater exploration, it has some onshore and some shallow water assets in Somalia. The company has made some significant discoveries in Tanzania as well as in Equatorial Guinea and has warranted the company significant attractiveness to potential investors. The company is perusing an active appraisal and exploration drilling campaign across the company’s portfolio. Up to 10 wells are expected to be up and running by the end of the 2014 financial year. These wells promise a brighter future for the company and have attracted many an investor (David et al 143). Soco international plc is an international oil and gas exploration company. The company also ventures into production. The company has its headquarters in London. Soco has interests in Vietnam, and several African Nations such as The Democratic Republic of Congo, Angola, and The Republic of Congo, specifically, in Brazzaville. In 2010, the company began to explore in the Virunga National Park in the DRC which is home to over 7oo endangered mountain gorilla. The company allegedly bribed the president of the DRC to get permission to drill in the park. Despite this negative publicity, the company has made some major discoveries in Block V of the park which they made clear was nowhere near the mountain gorillas. The company, in 2010, aimed to derisk some 600 million barrels of net recoverable reserves with a program focused in drilling in Vietnam and DRC (David et al., 45). Afren Plc is an independent oil and gas company that is on the main market of the London stock market exchange. The company’s portfolio is diversified in production, development and in exploration. The company was founded in 2004 and its exploration and production is focused on Africa. The company has since 2005 expanded its portfolio across six African countries; Nigeria, Gabon, the DRC, Sao Tome & Principe JDZ, Cote d’Ivoire, Ghana and Iraqi Kurdistan. The company currently produces circa 22,000 barrels of oil per day from the current portfolio. This is about 3,500m3. The company operates The Okoro and Setu fields which are two shallow water fields in Nigeria, originally awarded to Amni in 1993. The first oil was found in June 2008 after the first two production wells were drilled. The wells achieved about 480m3 of oil a day each. Five more wells were added leading to a total of 3,500m3 a day from all seven (David et al., 45). Energy XXI Bermuda Limited, an oil, and gas exploration company concentrated in exploration and production in the United States Gulf Coast and in the Gulf of Mexico. The company’s portfolio spells out acquisition, development, exploration, and operation of natural gas and oil properties in onshore Texas and Louisiana. As of June 2012, the company’s estimated net reserves were about 119.6 million barrels of oil of which 71 per cent was oil. The company has 100 per cent interest in west delta-73 field among others. The company, as of June 2012 had an interest in about 450 gross producing wells on 239,502 acres as well as 41 producing fields (David et al., 204). Essar Energy PLC is a world class Indian energy company that deals with power and oil and gas industries. It mainly focuses on the fast growing demand of power in India. Its net worth of assets can be established at US$ 16 billion. Some of the activities that Essar involved in are; refining of petroleum products, power generation, transmission, and distribution of their products to the different parts of the country. Raw material acquisition has been a key activity lately; this is to ensure that production is always on and depletion of their sources is not an issue. There have been projects that have been noticed that involve exploration of petroleum and production. Essar was established in 1998 and has its headquarters in Port Louis, Mauritius. It has had major achievements since ten signifying that the business is doing well. This is because it has been listed on the London Stock Exchange and was added to the FTSE 100 Index. The company has installed power generators that produce approximately 3910 Megawatts in total across six plants. Essar has extended its operations in other parts of the world that include Asia and Africa, Kenya and UK (David et al., 206). Genel Energy PLC is oil and gas industry founded in 2011 and has its headquarters in Ankara, Turkey. Its major activities now are based in Iraqi Kurdistan but there are plans to extend its production I the Middle East and North African countries. The company is doing well financially as it is listed in the London Stock Exchange. Vallares is a company that merged with Genel after which both the bosses got top positions in the company. Ownership of the company was split equally; hence both companies that merged own 50% each. Genel operates on a cash flow of US$600 million on their balance sheet that is available to build and provide funds required in the exploration in Africa. It mainly targets the Turkish market by providing power and their products whereas improve the country economically. It has world class assets that are owned typically by the Majors. For example two of the majors; namely Taq Taq and Tawke own 2P gross reserves amounting to 1.3 billion bbls. Further African exploration prospects at least 250 million bbls (David et al., 211). Premier Oil PLC is an oil industry that has its headquarters in London with gas and oil specialties. It plans to extend its production further in Africa and Asia. It has grown rapidly in the recent years to a whooping net worth of $1501 million an operating income of $352 million by the year 2013. It is focused on the upstream investment sector. This means that oil and gas exploration are their main activities as opposed to the downstream form of investment that includes refining and retailing of their products (David et al., 216). This company started back in 1936 which explain its major achievements as compared to other similar companies. It has acquired various interests like in the North Sea and has expanded its operations to the UK continental Shelf. Other areas of interest that Premier has focused and acquired properties are Sudan and West Africa. In 1998, Shell and Premier came together and extended their operations in the exploration sector to Pakistan forming a joint company, PSP. In addition, it is an independent production and exploration company majoring in gas and oil interests. Potential investors are promised significant returns by the company’s activities (David et al., 216). Cairn Energy plc is one of the leading gas development and exploration companies in Europe. This is because its operations are widespread all over Europe; it has headquarters in Edinburg, Scotland and operational centres in London (UK), Madrid (Spain) and Stavanger (Norway). Cairn has been in this business for about 33 years; it was founded in 1981. It has a net income of $555.9 million with an operating income of $879.1 million. Its huge activities are based in India where it boasts about 20 fields of oil production. Production in a day of this company has been estimated at 33000 barrels of oil per day. The company is listed in the London Stock Exchange, Bombay Stock Exchange and added in the FTSE 250 Index. There has been no known expansion of their production in Africa; their major focus is in Asia where they target area like India and the Middle East (David et al., 218). Conclusion From the above discussion, it is clear that the future of the oil production industry is as bright as its present and it’s past. Petroleum products, especially gas and oil are very useful in the production industry. For this reason, companies with licenses for exploration and production are guaranteed a ready a market. All the thirteen companies described in this discussion have licenses either in West Africa or South America. Together, the two regions account for a large percentage of the world’s total oil production. Like all other industries, the petroleum industry faces some problems due to lack of investment. One would expect that the lack of investment would not be as severe in this industry due to the never-ending demand for petroleum products. This is however not true as the industry still faces a lot of risk in oil reserves. References David, Victor G, David R Hults and Mark C Thurber. Oil and Governance. Cambridge: Cambridge University Press, 2011. Print. Read More