Page 6 - Euroil Week 13 2020

EurOil INVESTMENT EurOil
Siccar stalls Cambo FID in North Sea
UK
Siccar Point said the delay made sense, but that Cambo was still an “extremely attractive” development.
PRIVATE equity-backed North Sea operator Siccar Point Energy has delayed taking a final investment decision (FID) on its flagship Cambo oil project until the second half of 2021, because of the coronavirus (COVID-19) pandemic.
Siccar, which is partnered at the project with Royal Dutch Shell, said that “unprecedented worldwide macroeconomic dislocation” as a result of the coronavirus, meant it had to post- pone the FID, which had been expected in the third quarter of this year.
Cambo, West of the Shetlands, holds 900mn barrels of oil in place (OIP), with its first phase due to recover 150mn barrels using a floating production, storage and offloading (FPSO) ves- sel. It had been anticipated to be one of the big- gest new field investments in the UK to get the all-clear in 2020.
Pushing back the decision “makes sense” until market conditions stabilise, Siccar CEO Jonathan Roger explained.
“Cambo remains an extremely attractive development with compelling economics,” he said in a statement on March 30. “However, given the uncertainty of the global situation, including
whether any people, goods and services can be mobilised in OECD countries, it makes sense to hold off final approval until some normality returns to the market and a clear and robust path forwardcanagainbeestablished.”
Siccar has interests in six projects in the UK North Sea and West of Shetlands that it expects to produce around 80,000 barrels of oil equiva- lent per day (boepd) by the end of the decade. Its net output was 9,458 boepd in the second half of 2019.
“In the meantime, Siccar Point is very well positioned with respect to this downturn, hav- ing both substantial cash balances and very full hedgingfor2020and2021,”Rogersaid.“During the period of delay, we will continue to mature key aspects of [Cambo] to facilitate a swift and efficient ramp-up when market conditions stabilise.”
Siccar said it would continue working with the existing supply chain to prepare the project for an FID next year, which is subject to the UK’s Oil and Gas Authority (OGA) approving a licence extension for the field. Siccar has a 70% interest in Cambo alongside Shell with 30%.™
London-based investor reopens talks on Romanian acquisition
ROMANIA
The downturn also presents opportunities, MetalNRG says.
A UK-based natural investment vehicle called MetalNRG has reopened talks on its planned acquisition of a stake in a Romanian oil and gas concession, in light of the crash in oil prices.
MetalNRG announced in November it had teamed together with an unnamed “Lon- don-based oil and gas investment specialist” to enter exclusive negotiations to buy a 75% stake in a Romanian operator, which in turn has a 100% interest in an oil and gas concession in the coun- try, valid until 2034. The asset offers near-term cash flow potential, it said.
The exclusivity period ran until February 28. In January, MetalNRG said the transaction met its investment criteria, but this was before the dramatic slide in oil and gas prices as a result of the spread of the coronavirus (COVID-19) pandemic.
In a statement on March 26, MetalNRG said it had proposed alternative terms for the acquisi- tion following the shift in market outlook.
“The new terms are being considered by the vendor and we expect them to revert by the end of the current month, although some slippage can be expected due to COVID-19,” it said.
MetalNRG added that current market con- ditions also offered other “potentially attractive” transactions in the oil industry. It is actively pur- suing such projects with strategic intent, it said, prioritising those that offer short-term cash flow and exploration upside.
“We continuously review our cash and liquid- ity position and are confident that we will be able to weather the storm and come out of this crisis stronger than before,” the company said.
MetalNRG does not list any other oil and gas investments on its website. But it is involved in projects to exploit gold in Arizona, cobalt in Aus- tralia and uranium in Kyrgyzstan, all of which are at the early stage of development. It also has indirect interests in gold and copper exploration ventures in Australia through a London-listed firm called Cobra Resources. ™
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Week 13 02•April•2020