Annual Report 2010 - Ophir Energy

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18 Ophir energy plc | 2010 ANNUAL REPORT BUsiness review | OPERATiONs REviEw Interest The Group has an 80% participating interest in Marovoay Block 2102 and is designated as the operator. Exploration and appraisal The sedimentary sequence comprises an eastern Permo- Triassic failed rift sediment infill and a western Jurassic- Cretaceous passive margin section. Management believe that the wide variety of structural styles, the influence of halokinesis, the presence of organic rich shales and hydrocarbons in nearby wells and at outcrop, together with potential reservoirs at the Permo-Triassic, Jurassic and Cretaceous levels make Marovoay Block 2102 an attractive block for further exploration. In addition, the use of high-resolution gravity gradiometry data provides an opportunity to benefit from the early application of new technology that was previously not available. Management believe that new insight afforded by the interpretation of these data could help reduce the risk associated with exploration drilling based on existing seismic data. The current exploration phase is due to expire on 8 July 2011 and the Group is required to notify the Government of its election to move into the first extension period by 8 June 2011. During the first extension period (which expires on 8 July 2013), there is an obligation to drill one exploration well. Berbera psA, somaliland Overview The geology of Somaliland is considered to be contiguous with that of Yemen. Reconstructions of the tectonic plates in the area as they were prior to the opening of the Gulf of Aden, suggest that the geological structures within the Berbera PSA were continuations of the rift basins in Yemen which host a substantial number of oil discoveries. In April 2003, Rova Energy Corporation Ltd (“Rova”) entered into the Berbera Block PSA (“Berbera PSA”) with the Government of Somaliland which was subsequently amended by an addendum in May 2006. Rova was a special purpose company established to acquire and develop the Berbera PSA. In return for providing early funding, Mvelaphanda was awarded an option to acquire 75% of Red Sea Eritrea Ethiopia Djibouti Yemen Berbera PSA Somaliland Gulf of Aden Somalia the issued share capital of Rova. The remaining 25% was held by a private individual. The Group acquired this option from Mvelaphanda in October 2004 and in March 2005 exercised its option to acquire 75% of Rova. In February 2007, the Group and the private individual agreed to exchange the Group’s shareholding in Rova for a direct interest in the Berbera PSA. This was subsequently ratified by the Government of Somaliland in March 2007 (with the transaction completing in May 2007) and the Group is now a direct participant in the Berbera PSA holding an interest of 75% and is the designated operator. In 2008 Rova agreed to sell its 25% interest in the Berbera PSA to RAKGas. The Group and RAKGas currently participate in the Berbera PSA through a joint venture governed by a joint operating agreement. The Republic of Somaliland re-declared its independence from Somalia in 1991. It remains subject to a sovereignty dispute with neighbouring Somalia but is in active diplomatic discussions with surrounding states and the African Union regarding formal recognition of its independence. So long as sovereignty over the Berbera PSA area remains disputed, the Group’s rights and obligations in respect of its Somaliland assets also remain uncertain. As a consequence US$5.3 million was written off at 31 December 2010 for reasons of impairments. (Refer to note 9(ii) (a).) The Berbera PSA, located in northern Somaliland, is predominantly onshore but also extends offshore into the Gulf of Aden. Interest The Group owns 75% of the Berbera PSA and is designated as the operator. Exploration and appraisal Management believes that the petroleum geology of Somaliland is contiguous with that of Yemen (a territory where there have been significant oil discoveries and production). The Group acquired 2D seismic data offshore and completed an aeromagnetic survey over the onshore areas in Q1 2008. The Group is currently in the third exploration period which commenced on 1 December 2010. Forward plan Following a re-interpretation of the surface and sub-surface geology the Group has identified locations where, following the acquisition of additional seismic data, it believes drillable prospects could be defined. Discussions with the Government of Somaliland are underway to re-configure the terms of the Berbera PSA to allow for the acquisition of new seismic data. If, following the acquisition of these data, it is possible to define risk covered prospects, the Group intends to drill one or possibly two exploration wells. Figure 9 - Berbera PSA - Somaliland
Block Marine iX, congo (Brazzaville) Overview Ophir is a partner in a joint venture with Premier and Kufpec in the Marine IX block offshore Congo (Brazzaville) (“Block Marine IX”); Premier are in the process of withdrawing from the joint venture. Block Marine IX lays offshore Congo (Brazzaville) in the area where the Tertiary aged Congo Basin Fan overlies the Cretaceous to Tertiary Lower Congo Basin. The gross area of Block Marine IX is 1,044km 2 and water depths range from 300 to 1,200m. therefore drilled as a sole risk operation by the remaining joint venture participants. US$1.0 million of capitalised exploration costs were written off at 31 December 2010. (Refer to note 9(ii) (b).) saharawi Arab Democratic republic (“sADr”) Overview SADR was formerly known as Western Sahara and was a Spanish colony until 1960, when it was known as Spanish Sahara. The area is subject to a sovereignty dispute between the indigenous Saharawi people, as represented by the Government of the SADR, and the Kingdom of Morocco. The SADR is recognised as a sovereign state by the African Union but has yet to receive full international recognition by the United Nations. 19 Ophir energy plc | 2010 ANNUAL REPORT BUsiness review | OPERATiONs REviEw Congo Morocco Masseko Marine Yombo Marine Loango Marine Zatchi Marine Daora Laayoune Liklala Marine Haouza Frida Marine Yanga Marine Sendji Marine Mijek Mahbes Saharawi Arab Democratic Republic (SADR) Fderik Mauritania Marine IX Kitina Marine Emeraude Marine Nouadhibou Figure 11 - Daora, Haouza, Mahbes and Mijek Blocks - SADR LEGEND Ophir Well Existing Oil Discovery Interest Moho Bilondo Complex Ophir has a 31.5% interest, Premier (operator) has a 31.5% interest and Kufpec has a 27% interest. The Government have a 10% carried interest. The First Exploration Period expired on 4 October 2010. Premier notified the Government of its intention to withdraw at the end of the first exploration period. The remaining partners applied for a 12 month extension (5 October 2010 to 4 October 2011) to allow time to finalise the withdrawal of Premier and the assumption by Ophir of operatorship. If the negotiations for an extension are successful, then the Company may acquire some additional interest in the PSC. Exploration and appraisal Boatou Marine N’Kossa Marine Nemba Figure 10 - Block Marine IX - Congo (Brazzaville) The Frida-1 exploration well drilled by Premier and Kufpec during 2009 to test a Cretaceous aged carbonate raft play did not encounter any hydrocarbons. Ophir had elected not to participate in the drilling of Frida-1 and the well was Takula On 16 March 2006, the Group and Premier Oil (SADR) Limited (“Premier Oil SADR”) entered into assurance agreements (the “Assurance Agreements”) and associated PSCs with the government of the SADR in respect of four blocks (Daora, Haouza, Mahbes and Mijek) in the offshore Aaiun Basin. These agreements give each of the Group and Premier Oil SADR a 50% interest in each block. The Group is designated as the operator in respect of each asset. The four areas under licence cover a total area of 74,327km 2 in water depths ranging from 0 to 2,500m. The Assurance Agreements signed by the Group specify that the associated PSCs will not come into effect until, amongst other things, the SADR has been formally recognised as an independent and sovereign state by the United Nations. Pending such recognition, the Group has no rights to carry on exploration activities in the licence area and no material obligations in respect of these assets. If the SADR has not been recognised as a sovereign state by 2016 and the agreements are not extended, the Assurance Agreements and associated PSCs will terminate and the Group’s conditional rights and obligations will fall away. relinquished assets Block 3, Nigeria/São Tomé & Principe JDZ The JDZ is jointly administered by the governments of Nigeria and São Tomé & Principe. Subsequent to 31 December 2010, the Group withdrew from the Block 3 PSC and relinquished its 4% interest.
Page 1 and 2: An African Energy Company Annual Re
Page 3 and 4: Contents Overview Highlights of the
Page 5 and 6: 3 SADR x4 Daora, Haouza, Mahbes, Mi
Page 7 and 8: negotiations with the Government of
Page 9 and 10: 7 Ophir energy plc | 2010 ANNUAL RE
Page 11 and 12: Jonathan Taylor BSc (Hons), MSc - E
Page 13 and 14: 11 Control room on the rig floor, D
Page 15 and 16: 13 The operational activities under
Page 17 and 18: Forward plan The recent drilling re
Page 19: Agc profond, Agc Overview AGC is a
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Page 25 and 26: OPERATIONAL RISKS Discovery Risk: N
Page 27 and 28: 25 ORDINARY SHARES OF 0.25P EACH NA
Page 29 and 30: supplier payment policy The Company
Page 31 and 32: Auditors Each of the persons who is
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Page 37 and 38: The remuneration of the Executive a
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Notes to the Financial Statements S
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Corporate directory DirecTOrs non e
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Annual Report 2010 - Ophir Energy

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