Simba Energy finds itself surrounded by the lions of oil and gas exploration

Simba Energy (TSX-V:SMB) founder Hassan Hassan is a real character. In fact he is of another era - a prospector who has spent most of his adult life looking for natural resources, most recently gold and diamonds in Africa. 

But rather than stones and precious metal, the latest discovery is something of a departure for Hassan. He has located crude oil in Liberia. 

On the back of it Simba has acquired the country’s first onshore reconnaissance licence – a 1,366 square kilometre area close to the airport in the capital Monrovia. 

Hassan and his team have found seeps on the ground, which is where crude oil actually sits on the surface.

But perhaps more importantly, licence area NR-001 borders three highly prospective but hugely interesting offshore blocks.

West Africa is the latest big thing for oil exploration, with Ghana currently providing the excitement, though Liberia is now starting attract some international interest.

Licence area NR-001 is Toronto and Frankfurt listed SimbaEnergy’s sole focus.

The company, which used to be known as Goldstar Resources, is in the process of turning its exploration licence into a production sharing agreement.

In September it submitted the paperwork to the National Oil Company of Liberia (NOCAL) and last month received an official letter acknowledging receipt of the application.

So times are exciting for Vancouver headquartered company and Hassan, who currently acts as a consultant to the firm.

Simba is in what experts would call an up-and-coming neighbourhood. 

Anadarko and Tullow have acreage off-shore, although the big surprise was when America’s Chevron bought blocks 11, 12 and 14. 

They sandwich a little-known London based explorer, Broadway Consolidated, while offshore blocks 12 and 14 back onto Simba’s licence area, which of course is onshore.

“Chevron coming into Liberia does two things,” Hassan explains.

Chevron obviously strongly believes there is potential to find oil there and secondly, their farming in on such a large scale  in is a huge validation of the government of Liberia.”

Chevron’s arrival is just a small part of the internationalisation of the country after years of civil conflict and political instability, Hassan says and this is continuing with large international miners such as BHP Billiton making a bee-line for the country alongside steel producer Arcelor-Mittal.

Hassan’s discovery of oil in Liberia had more to do with his very methodical approach to prospecting than good luck – although there was some of that too.

He is a stickler for research before he hits the road, and at times his methods are more those of a private detective than a geologist (though he’s had training as neither).

“I go to the Ministries of Mines and Energy in every country and ask for geological maps,” he says. 

“The second thing I ask for is a mining claim map. And if I think there’s oil, I’ll ask for an oil block map. And then I’m off on my travels. I drive, walk, hike and generally explore the country and its infrastructure.

“When visiting a new area I talk to the local villagers. people I meet along the way. The locals always have a lot of useful information.” 

In Liberia the authorities had just finished a bid round for offshore oil blocks. So he was lucky, there was some information available.

What he was given in Liberia was an off-shore map with a 2-D seismic survey of the area around coastal Liberia, which also included the offshore sedimentary map.

From that he detected a “tiny sliver of the offshore basin” coming onshore just south of Monrovia, where the international airport is located, and where he’d heard reports of oil seeps in the area.

Ever the sceptic he was willing to write the so-called seeps off as discarded jet fuel until he could prove otherwise. However, he didn’t dismiss the idea of surface oil altogether.

“There were stories of people digging water wells and them becoming contaminated by kerosene,” he explains.

“And that rang a few bells, and few little lights went on in my head.”

He spoke at length to the local population as he attempted to gauge whether it really was worth looking for oil in the area.  

“Sometimes if they were true stories, they would tell me where they thought the oil was. If they weren’t they’d say you can’t get there, the road isn’t good or some sort of ridiculous line,” he says of the conversations he had.

“Some guys just didn’t know what they were talking about. But a few said there’s oil by the airport and that other people had come looking for it.

“I drove out the airport, walked around and asked around. As far as I could see a lot of the oily, slicked places could have been decaying vegetation. There was a smell of hydrocarbon, but you are in jungle, it is hot and it is full of bugs.”

Hassan was still not totally convinced, but he thought was worth trying to acquire the area around the airport. 

At the same time he came back to Vancouver and contacted friends and associates who might have some knowledge of the area.

His lucky break came with a call to James Dick, now Simba’s technical director. 

Dick was formerly a consulting geologist to Katana Resources, a junior oil exploration company based in Calgary.  

The company had explored Liberia for oil and gas in the early 1980s and commissioned Dick to drill an exploratory well in Liberia smack bang in the area Hassan was now investigating. 

“That was it. That was my cue,” Hassan says. 

“I found other Canadian geologists who had been in the area and had flown airborne magnetics, had done preliminary mining and had looked at the offshore. They thought the data was good, though highly risky, highly speculative,” Hassan says.

“But I applied for the onshore block anyway and when it was granted by NOCAL, I vended it in to Goldstar Resources which is now Simba Energy.” 

Since then Tullow and Anadrko have farmed into the three northern-most blocks in Liberia. 

And in the last few weeks Chevron has farmed into the three off-shore blocks adjacent to Simba’s licence area.

Hassan says there has already been some interest in Simba’s potential onshore play. 

He expects the company to begin talks in earnest with potential partners once the production sharing agreement has been granted by the authorities.

At this point Simba may consider taking on a partner to share the financial burden of an exploration drilling programme and seismic survey, which could cost between US$10 million and US$15 million.

“We’ve already had unofficial expressions of interest from people – no brand names, just small groups that would like to participate in one form or another,” Hassan says.

In the meantime, a number of mainstream investors are also warming to the Simba story.

“We have gone from nowhere to 25 per cent institutional investor base in the last six or seven months,” he adds.