• Wednesday, 16 May, 2012

Rialto plans Ivory Coast future

Bright future: Rialto will seek project partners for its CI-202 block offshore the Ivory Coast.

AFP/SCANPIX

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Andrew Hobbs , Andrew Hobbs , Andrew Hobbs , Andrew Hobbs

 23 February 2012 01:21 GMT

Rialto chairman Glenn Whiddon has two predictions – a possible short life-span for his own company and a long future for its assets.

Speaking to journalists at a media luncheon in Perth last week, the chairman of the Australian oil and gas explorer said his company was looking to create opportunities for future partners on its Ivory Coast project.

“We don’t want to be here in five years’ time still working and developing the Ivory Coast on our own,” he said.

“We would like to farm-out, consolidate, merge with somebody in two to three years’ time so we can get some real critical mass and avoid the [dilution] that comes with continual capital raisings.”

Whiddon was speaking after the company wrapped up a A$60 million capital raising through institutional investors to fund a drilling campaign on its offshore CI-202 block, located in Ivory Coast waters.

Following the capital raising, Whiddon said the company would seek to expand its debt facilities with banks, noting that interest from the African banking sector was strong.

“We will need more capital within 12 months after the completion of drilling,” he said.

“We have not made any decisions as to who we will work with, who we’ll use and so forth, but we will be looking at putting in place first a debt facility, and using that debt facility then to start acquiring some long lead items compressors and others.”

Set to start at the end of this month, the campaign will see three wells drilled aiming for four targets, with Rialto aiming to bring two into production next year.

The campaign will be carried out by Transocean's jack-up rig GSF Monitor, with each well expected to take 30 days to complete, subject to results testing.

The block was first drilled in 1972 and again in 1977 by Esso, with Whiddon saying operators at the time were looking for structures at the time similar to the Ivory Coast’s Foxtrot gas field.

“We know we have oil and gas in the system, we know we have a system that flows and basically what we now have to do is validate these historical results,” he said.

Expecting to ramp production from the fields up to about 10,000 barrels per day of liquids and under 100 million cubic feet per day of gas, the block would be connected to Ivory Coast capital Abidjan by a sub-sea pipeline from what will be known as the Gazelle hub.

In turn, these would be connected to the nation’s existing gas fired power stations, thereby increasing the Ivory Coast’s available gas by between 80 million and 100 million cubic feet of gas – or 40% on current levels.

A part owner of one of these power stations is the World Bank's private sector lending arm, the International Finance Corporation, which recently agreed to invest $20 million in Rialto Energy shares.

Whiddon said he was very happy the corporation had invested at the pre-drilling stage.

In addition, signing a memorandum of understanding with the Ivoirian government for a gas sales agreement guaranteeing an offtake of 100 MMcfd had been a “game changer” for the company, he said.

“It certainly validated the story in terms of the technical rigor, the management team and the relations that we have with the Ivoirians,” Whiddon said.

That relationship had improved after Rialto was one of the few countries not to declare force majeure during a period of unrest that followed former Ivory Coast leader Laurent Gbagbo’s defiance of calls to step aside after losing an election in 2010.

“One of the things that we found with the Ivoirians is I think we were the only party that didn’t declare force majeure during the four to five months of civil unrest, and they rate that really quite high,” Whiddon said.

“They see that as a commitment by us to the Ivory Coast and to the block, and the positive attitude going forward.”

Whiddon said he was confident the nation would be politically stable in the coming years, saying it was a common question amongst analysts.

“Things in the Ivory Coast have now settled down extremely well – we have Hillary Clinton going there saying things are business as usual – and I think if the Americans have said it, it means everything,” he said.

Rialto, which owns 85% of the block with state-owned PetroCI holding the remainder, would make a final investment decision in April or May after the three wells were flow tested, Whiddon said.

“So the objective for us is to fast track the Gazelle discoveries and the Gazelle hub to bring it to production as quickly as possible and then to use that production to basically reinvest in further exploration as we go forward,” he said.

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