www.ophirenergy.com
Ophir Energy plc (Ophir) is the UK incorporated holding company of a group of companies (the Group) with oil and gas exploration assets in a number of African locations. The Group's headquarters are located in London (England), with operational offices in Perth (Australia), Malabo (Equatorial Guinea) and Dar es Salaam/Mtwara (Tanzania).
Dominion Petroleum in talks over new offshore licence blocks in Kenya
Dominion Petroleum (LON:DPL) looks set to expand its African exploration portfolio with a new licence block offshore Kenya.
The Kenyan government is reportedly in advanced discussions with UK-listed firms Dominion Petroleum and BG Group (LON:BG) over licenses for three exploration oil blocks off the Kenyan coast.
Press reports citing comments from Kenya’s petroleum commissioner, Martin Heya, claimed that Dominion is interested in one of the three blocks and the government expects exploration licences to be issued by April.
Industry sources confirmed that talks are ongoing.
It is understood that these three license blocks are contiguous to Anadarko Petroleum’s (NYSE:APC) offshore licences - in which Cove Energy also has a 15.5 stake.
David Farrell, oil and gas analyst at Evolution Securities, commented on the new frontier in the brokers ‘First Take’ morning note to clients.
“No commercial discoveries have yet been made in the basin, however, a number of oil and gas shows and oil seeps have been observed previously,” Farrell said.
He adds: “The interest shown in the area by Anadarko and BG suggests that if Dominion gains a licence, the company could add value through seismic and interpretation before farming out.”
Meanwhile, focusing on the assets Dominion already owns, the analyst looked ahead to potential farm-out deals in Tanzania.
“The next significant newsflow from Dominion should be the farm-out of an interest in Block 7 offshore Tanzania which may come later in the first quarter,” Farrell said.
“While farming out to an existing offshore Tanzanian operator (eg Petrobras, BG, Exxon) would be beneficial in terms of speed, we believe superior well carry terms would be achieved by bringing in someone not yet in country.”
Dominion has a significant portfolio of exploration assets in east Africa, with interests in both on and offshore Tanzania, as well as a controlling stake in an exploration license in the Albertine Rift Basin, Uganda. It also has an interest in the Democratic Republic of Congo, where it is partnered with Soco International (LON:SIA) and the DRC’s state oil company to explore ’Block 5’.
Dominion’s assets in east Africa have been turning quite a few heads in the City of late, with Block 7 in Tanzania attracting most of the attention.
In fact, just this week investment banking giant Goldman Sachs upgraded the stock, as its London-based analyst team eyed-up Dominion's attractive farm-out proposition.
“We view Dominion’s position offshore Tanzania as attractive and believe that farm outs could bring this acreage into focus,” Goldman analyst Christophor Jost said.
Goldman upgraded Dominion to a ‘buy’ and increased its price target from 7.28 to 10.53 pence per share - which implies 54 percent upside from the current price of 6.5 pence.
Werner Riding, oil and gas analyst at Ambrian Capital, also thinks a deal to farm-out Block 7 would be the likely value driver for the stock in the short term.
“In terms of deal timing we are hopeful terms can be agreed with one of the existing regional players before the end of April,” Riding said.
The major regional players include BG Group (LON:BG), Petrobras (NYSE:PBR), Exxon (NYSE:XOM), Statoil (NYSE:STO), Anadarko (NYSE:APC), ENI (NYSE:ENI) and Shell (LON:RDSB).
The analyst reckons Dominion will need US$25 million in back costs and a free carry on at least one exploration well.
According to Riding a successful farm-out could possibly allow drilling to get underway within 12 months t to test the 'Alpha' prospect - a multi-trillion cubic feet gas or 500 million plus barrels of oil target.
