Africa Oil & Gas 2015 Special Report Interview

In November 2014, Geoex VPs Jean-Philippe Rossi and Robert Sorley were interviewed by chief editor of Newsbase Ed Reed for Africa Oil & Gas 2015 Special Report. Please find extract from his piece below which is titled “Sounding the frontier’s depths”:

Sounding the frontier’s depths

By Ed Reed

The lure of frontier exploration continues to be the big draw of Africa, which remains one of the least drilled places in the world. The broad range of exploration maturity – and sheer scale – represents an opportunity for companies to acquire material stakes that can elevate a minnow to superstar, or at least so the dream goes.

The continent has played a major role in resource discoveries in recent years, accounting for more than half of the biggest finds of 2013 and 2014.

Hot spots include: West Africa’s transform margin, which has been demonstrated in Ghana, and with hopes for the country’s neighbours; East Africa’s offshore, in the north of Mozambique and south of Tanzania; East Africa’s rift basins, based on Uganda’s Lake Albert finds and replicated in Kenya’s South Lokichar, and, finally, the pre-salt reserves off West Africa, in Gabon and Angola’s Kwanza Basin.

Over the next few years there may be successes for exploration offshore South Africa, although conditions in some areas are tough, and Namibia – and in areas that have not yet attracted much attention.

One company with experience of overseeing the awarding process is Geoex. The company offers its services to governments, offering to value prospective blocks before they are offered via bid rounds.

Geoex “evaluates the most profitable areas for governments, then we contact vessels and we supervise the work. We acquire the data and then there is a bid round of blocks put on offer and the companies interested usually purchase the data at a lesser price. In this way they can negotiate and enter into deals with the governments,” the company’s vice president, Jean-Philippe Rossi, said.

Geoex has recently been working on three areas in Equatorial Guinea – F13 and G13, FGH12 and I12, I13 and I14 – offered under the bid round, which was due to close on November 30.

More broadly, the company has an interest in the Atlantic margins off West Africa and also the other side of the Atlantic Ocean, in the Caribbean and Latin America. “Equatorial Guinea is one of them but we have other projects in nearby countries and we recently signed an agreement with Nicaragua. Although that’s not the Atlantic, it’s on the Pacific Ocean side, but there’s no exploration yet on the Pacific side and it’s a prospective area. Unlike in Equatorial Guinea, where there is already production, and we are doing 3-D seismic, in Nicaragua we are offering regional 2-D seismic, which is due to start in 2015.”

One company that has already signed up to consider the Nicaragua results is Statoil, Rossi said, noting Geoex would be very unlikely to carry out work without pre-commitments. “If companies are unwilling to commit, that’s a pretty strong signal that we shouldn’t be acquiring data there.”

The benefit of Geoex carrying out the work, he continued, was that it could operate more nimbly than an oil company, while being ruled by many of the same concerns of risk. “By acquiring seismic we are putting out money where our mouth is and we assess the areas before trying to work on them – it’s a joint effort to identify the prospective areas.”

Another area in which the company is interested is Uruguay. “There is a bid round to be announced. Uruguay is a big place, there is a deep offshore area there and a shallow offshore area remaining, which is where we are and this is the last place available.”

Geoex considers the area’s potential and talks about it with companies which may be interested. “Once the bid round is announced, we start doing the seismic. It’s a joint evaluation – by the government and by us, but also by the oil and gas companies.”

Headwinds

The oil price decline of the last few months has caused some consternation among those in the industry, with a number of major – and minor – companies opting to batten down the hatches and ride out the storm. There will be a slowdown in exploration, Rossi allowed, so there may be less interest in acquiring additional blocks but the other side of pressure on the industry is that service costs will also decrease.

“For companies it may also be an opportunity, because we can benefit from services acquiring seismic data at a lower cost,” with Geoex in a privileged position owing to its focus on data services and processing, rather than holding assets. “We could even consider it an advantage, because it would allow us to acquire our data at cheaper prices today and sell it tomorrow, when prices have risen and exploration has re-started.”

Geoex tends to focus on countries that are moving into exploration and have great potential, “but not immediately, maybe within two or three years. We are preparing for the future, rather than being impacted by the present.”

“Africa continues to be perhaps the greatest remaining exploration frontier,” Rossi said, expressing confidence that Geoex would continue to pursue opportunities on the continent. “There are analogies between Latin America and Africa, Angola and Brazil, for instance, “so both places are interesting and have different challenges. Africa is one of our priorities and will remain so.”