No western supermajors submitted bids to acquire stakes in promising acreage made available offshore Angola by state-owned Sonangol, with the list of contenders dominated by junior players.
Sonangol needs to scale back its interests in eight shallow and deep-water blocks due to financial issues and began a farm-out process covering eight blocks in June.
Bids were submitted for all available tracts apart from lightly explored shallow-water Block 5/06.
Sonangol said on 7 October that a total of 35 proposals were received from 19 companies, either bidding in consortia or individually.
Sonangol has now started a due diligence process carried out by Trace International, with negotiations to follow.
This process is scheduled to complete on 8 November after which sales and purchase agreements (SPAs) will be signed, possibly by the end of this year.
The long list of contenders — even for prolific producing blocks 15/06 and 31 which are operated by Eni and BP, respectively — fell short of attracting the big western companies which have traditionally found a safe haven in Angola’s E&P sector.
Asked if the absence of western majors was disappointing for Sonangol, a well-placed oil company source in Luanda said: “Indeed.”
Eskil Jersing, a 35-year veteran of Africa’s upstream scene, added: “The incumbent majors and national oil companies are clearly happy with their ‘harvesting’ positions.”
He said that despite it being a buyers’ market, the limited interest shown by European players, for example, is due in part to the challenges of accessing capital.
“The UK and European public markets are still extremely tight. Only the very best assets will secure (funding).”
Jersing, who is also business development advisor to privately owned start-up Eburon Resources, argues that to make money in Africa, “the big issue... has always been about controlling the pace of activity.”
In the case of Angola, he said while both Sonangol and potential new entrants want to move fast and efficiently, the “bidders need to persuade investors that there is a sustainable and mutually aligned incentive to succeed between joint venture partners and the resource holder".
He added: “Times are changing, but control, capability and pace will still be key to delivering value accretive outcomes.”
Jersing wondered if the “anaemic” state of the funding market, combined with the recent surge in oil prices, could affect Sonangol’s goal of signing SPAs by the end of the year.
“Given a likely sustained uptick in oil price, a win-win SPA outcome for the new entrants and bidders within the next month may be challenging (vis-a-vis) buyer-seller valuations.”
However, he added that Sonangol “desperately” needs both funding solutions and sustained E&P activity in Angola.
The only major company to place a bid was China’s Sinopec, which has gone after Block 15/06 where it is already a partner.
Namibia’s state oil company Namcor submitted offers for five blocks — 15/06, 18, 23, 27 and 31 — in a joint venture with Sequa Petroleum and Angola oil services company Petrolog.
Sequa is thought to be a London-based and Netherlands-registered player whose website states that one of its strategic goals is to acquire development and production assets in West Africa.
Sequa’s executives — Jacob Broekhuijsen, Jim Luke and Dick ter Avest — have experience with Shell, BG Group and Schlumberger.
BP operates Block 18, which hosts the Greater Plutonio asset, while Block 23 in the Kwanza basin hosts the non-commercial Azul pre-salt discovery.
Block 27 lies in the Namibe basin, so Namcor could add to its insight into this play, a large part of which is located under Namibian waters.
London-based Afentra, led by former Tullow Oil chief executive Paul McDade, is chasing exploration Block 3/05 on the continental shelf as well as Block 23.
Angolan junior Falcon Oil bid for blocks 3/05, 15/06, 18 and 31, as did Somoil, another ambitious local player, although the latter is also chasing Block 27.
Falcon bid on its own, while Somoil teamed up with an unknown company called Sirius.
Canadian player MTI Energy — fresh from being awarded a raft of blocks in Angola’s recently completed onshore round — is chasing stakes in blocks 15/06, 18 and 31.
The remaining sole bidders are not well known.
These include Red Sky Energy — a company by the same name has acreage in Australia — which is targeting blocks 3/05, 15/06, 27 and 31.
Another bidder is Tyr Conseil, which appears to be based in the Ivory Coast, and has gone after blocks 15/06, 18 and 31, while Equinox, thought to be Nigerian, is chasing blocks 3/05 and 31.
A number of consortia are also making the running to secure minority stakes in exploration and production acreage.
One — comprising Adisandra and Growth Axis Holdings — has gone after the producing blocks 3/05, 15/06, 18 and 31, while another consisting of Sancorp and Arctic Securities, is the sole bidder on block 4/05, but is also hunting down stakes in 15/06, 18 and 31.
Adisandra appears to be based in Luanda and there is a company registered in the Cayman Islands that goes by the name of Growth Axis Holdings.
Sancorp’s origin is unclear, while an investment bank in Norway is called Arctic Securities.
However, two companies called Sancorp and Arctic Securities are also financial advisers to Luanda-based Dunox Oil & Gas Group, a subsidiary of Equinox.
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