It is over a year since Canadian Overseas Petroleum’s (LON:COPL) work on its flagship project in Liberia was put on hold because of the outbreak of the Ebola virus.
COPL holds 17% in the Exxon Mobil operated (83%) LB-13 offshore exploration block. This is a high potential project, for sure.
Mean prospective resources (P50) on the block have been put at 2.6bn barrels of oil gross with 449mln bbls net to COPL.
But the company, which is quoted in Toronto as well as London, has not been sitting on its hands in Liberia waiting for better times, although president and chief executive officer (CEO) Arthur Millholland did recently highlight an improvement to conditions in Liberia.
In March this year, COPL started diversifying by forming a strategic alliance with Shoreline Energy International, a conglomerate that specialises in acquiring interests in local indigenous companies across sub-Saharan Africa.
The joint venture (JV) is to acquire assets through a special purpose vehicle registered in Bermuda, called Shoreline CanOverseas Petroleum Development Corporation (ShoreCan). Shoreline’s interest in OML 30 in Nigeria and COPL’s interest in LB-13 in Liberia are outside of the JV.
The idea is that the JV allows COPL to progress its stated strategy, offering exposure to a spread of accretive oil and gas exploration and producing assets, as well as gas–to-power projects to monetise hereto stranded natural gas, while minimising risk and capital requirements for shareholders.
Since March, the JV has been busy building such a portfolio with a number of confirmed projects in Tanzania and Namibia acquired at modest cost.
In Tanzania, ShoreCan has an option to acquire a 60% operating interest in two offshore blocks, known as the Latham Licence Area (5,056 square kilometres, or sq km) and the Kimbiji Licence Area (4,298 sq km), which extend from the shore to offshore depths of up to 1,000 metres.
On exercise of the option, ShoreCan will assume operatorship of the offshore blocks. The licence areas are located immediately east of Dar es Salaam, the principle Tanzanian gas market.
The Kimbiji Licence has a drill ready prospect (Kisarawe East) onshore 15km north of the Mururanga-1 well, which tested gas at the rate of 19.7mln cubic feet of gas a day (mmcfd) from the thin Upper Cretaceous Sakura zone.
In Namibia, the new partnership has taken an 80% interest in three deep-water blocks (1708, 1808, and 1709), all situated north of the Walvis ridge on the Namibian/Angolan border at the southern end of the Namibe Basin.
The Namibe Basin is said to be the conjugate basin to the Santos Basin offshore Brazil across the Atlantic where there have been number oil finds such as the Jubarte, Carioca and Tupi discoveries.
Having earlier this year relinquished its interests in New Zealand, COPL has said that proceeds of its US$7.2mln fund-raise will go towards progressing the new sub-Saharan involvements.
The company has also said it is also looking at other opportunities in Ghana, Mozambique, Cameroon, Equatorial Guinea and Mozambique.
ShoreCan has said it does doesn’t envisage any short-term requirement for material capital expenditure on any of the assets already acquired, but COPL has stated that the exploration opportunities being pursued will, in time, if they are successful require substantial additional financing before they are able to generate positive cash flows.
Financing, however, does not like being an immediate problem with Liberia and Block LB-13, where investors will probably now re-focus their attention. On May 9 the World Health Organisation (WHO) declared Liberia Ebola free.
COPL has a limited say over the timing of the resumption of the drilling programme, but it has announced that it has been told by the operator that the Ebola free declaration is the first step in the return of its expatriate employees into Liberia, the recommencement of the well planning process, the securing of all permits from the agencies of the Government of Liberia, and the permission to allow drilling to start.
The shares recently were bumping just above their 52-week low of 3.45p.