Market Report: Tower Resources, Beluga Energy Limited Sign Farm Out Agreement for Offshore Block in Cameroon

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CAMEROON

Africa-focused oil and gas firm Tower Resources signed an agreement to farm out some of its stake in the Thali block offshore Cameroon to Beluga Energy Limited. Under the binding Heads of Agreement, Beluga will take a 49% non-operating working interest in Thali Production Sharing Contract (PSC). The farm-out covers $15 million towards the cost of the NJOM-3 well that Tower is planning to drill on the Thali block.

Beluga will receive a 49% working interest in the PSC, subject to an overriding royalty of 10% for Tower’s subsidiary TRCSA on the contractor share of production accruing to Beluga under the PSC. Tower said the well cost is approximately $16.8 million, of which circa $3 million has already been spent. Each party will recover costs funded and recoverable under the PSC, pari-passu. Costs more than $15 million, and future costs, will be funded pro-rata for Tower’s and Beluga’s working interests.

In March 2021, Tower received an extension of the first exploration period at its Thali license offshore Cameroon. The company had, a year prior, declared Force Majeure in respect of the First Exploration Period of the PSC, considering the restrictions required to combat the COVID-19 pandemic, delaying the planned spud date of the NJOM-3 well in the license. Tower Resources is planning to drill the NJOM-3 well to test a discovery previously made by Total. The Thali PSC covers an area of 119.2 km2 with water depths ranging from 8 to 48 meters in the prolific Rio del Rey Basin, in the eastern part of the Niger Delta.

NIGERIA

The management of the Nigerian National Petroleum Corporation (NNPC) announced the redeployment of some staff to key positions towards attaining global excellence and profitability. According to a statement released by the Group General Manager, Group Public Affairs Division, Dr. Kennie Obateru, Billy Okoye has been appointed the new Group Executive Director, Ventures & Business Development while Aisha Ahmadu-Katagum has been promoted to the position of Group Executive Director, Corporate Services. Engr. Adeyemi Adetunji, formerly Chief Operating Officer, Business & Ventures Development, becomes the Group Executive Director, Downstream, while Mohammed Abdulkabir Ahmed, formerly Chief Operating Officer, Corporate Services, becomes the Group Executive Director, Gas & Power. Speaking on the Development, Group Managing Director of the Corporation, Alhaji Mele Kyari, said the new appointments would enable the corporation to live up to the expectations of Nigerians and achieve its vision of becoming a world-class energy company of choice.

The Minister of State for Petroleum Resources H.E. Chief Timipre Sylva delivered the graduation lecture at the National Defence College Course 29 in Abuja titled “Enhancing Digital Technology in the Oil and Gas Sector of Nigeria for National Development”. During the lecture, the Minister mentioned that promoting digital transformation in the oil and gas industry will ultimately lead to a boost in productivity and efficiency. Minister Sylva said data-centric tolls would enable a real-time view of operations across the value chain and allow predictive operations and maintenance. Furthermore, closing the digital gap would help lessen hindrances to the efficient production of hydrocarbons while improving the process optimization in the industry.

GLOBAL

On August 12, crude oil prices slid after the watchdog for western oil consumers warned that the COVID Delta variant will slow down demand growth for energy in the second half of 2021. The U.S. West Texas Intermediate (WTI) crude futures settled down 16 cents at $69.09 per barrel, while Brent crude futures settled down 13 cents at $71.31. So far for this week, WTI has only staged a recovery of 1.2%, after losing 7.7% last week for its sharpest weekly loss since October 2020 and Brent is up 0.8% week- to-date, after a 7.4% drop last week.

The U.S. Energy Information Administration’s (EIA) weekly report for August 11, showed crude oil inventories decreased by 0.4 million barrels from the week ending August 6. At 438.8 million barrels, U.S. crude oil inventories are about 6% below the five-year average for this time of year.

The International Energy Agency (IEA) 2021 outlook came on the same day that the Organization of the Petroleum Exporting Countries kept its forecast for oil demand growth in 2021 and 2022 unchanged despite the risk of the variant. Oil prices fell after the IEA put last month’s demand slump at 120,000 barrels per day, and predicted growth would be half a million bpd lower in the second half than it had estimated last month. EIA said: “Demand growth abruptly reversed course in July and the outlook for the remainder of 2021 has been downgraded due to the worsening progression of the pandemic and revisions to historical data.” Additionally, new COVID-19 restrictions imposed in several major oil-consuming countries, particularly Asia, look set to reduce mobility and oil use.

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