Alan von Altendorf

Is Exxon Betting on $100 Oil?

Okay, let's do the math on 1.6 billion recoverable. Exxon offered $4 billion upfront for 25% (400 million bbls) or $10 per barrel, which is double the capex at BP's Thunderhorse in deepwater U.S. GOM. But I don't think Exxon or whoever finally prevails will get off that easily. It's a lead pipe cinch that Ghana won't put in a penny and they'll assess the "partners" 100% of the development, graft, royalties, remediation, local content and labor, etc.

Nor do I think they have more than 400 million recoverable, which puts the price tag at $40 upfront plus more in the future. I think it's Peak Oil hysteria bidding greenfield plays up to $100 a barrel.

Is Exxon Betting on $100 Oil?

Full story www.upstreamonline.com... Upstream Online

Is Exxon Betting on $100 Oil?

The plot thickens:

"Sinopec, represented by Neil Bush, the younger brother of former US President George W. Bush, recently made an offer to state-run Ghana National Petroleum Corporation to form a joint bid for a stake in the Jubilee field...

"Several other foreign oil companies, including Franch giant Total, UK supermajor BP and China’s Cnooc Ltd., have sent representatives to Ghana for talks with the government about acquiring a stake in the field." [Offshore wire]

Is Exxon Betting on $100 Oil?

Rule of bootlicking, not rule of law?

The Ghanaian government is angry at Kosmos for what it perceives is a flouting of its laws -- in particular the sharing of oilfield data. Ghana's oil minister and the head of GNPC have both said they do not consider the Kosmos-Exxon deal done, and that they have the right to cancel any contract...

In June, relations between Kosmos and Ghana officials hit a rocky patch when the Ghanaian minister of energy felt insulted during negotiations with Kosmos officials.

"He doesn't understand African courtesies when negotiating," the person said, referring to the Kosmos executive. "So he easily infuriated the minister." A week later, the minister and the CEO happened to be seated next to each other on a flight to London and an awkward exchange took place...

[Rigzone / Dow Jones / Wall Street Journal]

Is Exxon Betting on $100 Oil?

From bad to worse in Ghana.

State-run Ghana National Petroleum Corp (GNPC) believes Kosmos Energy's deal to sell its stake in the huge Jubilee oil field to ExxonMobil is illegal and is ready to buy the stake itself, a GNPC source said. [Upstream Online www.upstreamonline.com...]

Is Exxon Betting on $100 Oil?

Absolutely verboten. I'd bet $5 mil on Saginaw Bay jackups.

Is Exxon Betting on $100 Oil?

Jeep, just a guesstimate based on historical onshore production in Michigan from those two formations. The provincial govt of Ontario estimates 11 million cubic meters of oil in Lake Huron.

Is Exxon Betting on $100 Oil?

MJE_PDX, thanks, especially your comments on price discovery.

Is Exxon Betting on $100 Oil?

Ooops, big surprise, state-run Ghana National Petroleum Corp wants to buy Kosmos Energy's stake in the giant Jubilee oilfield, a GNPC source said today. There are still many unknowns about the final deal, some of which could ultimately lead to Ghana controlling part or all of Kosmos' stake in Jubilee, US-based analysts said.

"There may or may not be preemptory rights," Mark Gilman, energy analyst at The Benchmark said.

"Even if they are not built in, we're dealing with a sovereign nation."
[Upstream Online]

Is Exxon Betting on $100 Oil?

off topic, IMO 200 mmbbls in the St Peter sand under Lake Michigan, 300 million in the Michigan Formation under Lake Huron. We have our own Jubilee in state waters of the US state that needs it most.

Is Exxon Betting on $100 Oil?

FYI - Petroleum Economist reports that Jubilee phase-one development has been planned with nine production wells together with five for water-injection and three for gas-injection. Tullow ordered a FPSO that can inject 200,000 bpd water.

Doesn't sound like much of a water drive to me, and if memory serves Tullow's wells didn't see OWC. Might be sealed.

Is Exxon Betting on $100 Oil?

Thank you, Jeep. Very clear, concise summary.

Is Exxon Betting on $100 Oil?

Let me repeat that I think recoverable light sweet crude at Jubilee is 500 million bbls. "Probable P2/P50 reserves" are sell-side blue sky, but if Tullow's estimate is correct then Jubilee is about the same size as BP's Thunder Horse in US waters. Why did Exxon pay 4x more to participate in Ghana?

Is Exxon Betting on $100 Oil?

Jeep, that's the crux of the question, how much is recoverable. Tullow says the "gross upside" offshore Ghana is 4+ billion bbls. I'm sure P3 contingent reserves will be revised upward to 6 billion by a 3rd party independent engineer.

If Jubilee was in Brazil, it would be bigger than Kuwait.

Is Exxon Betting on $100 Oil?

This is getting funnier by the minute.

"State-run Ghana National Petroleum Corporation (GNPC) will weigh up ExxonMobil's deal to buy Kosmos Energy's stake in the Jubilee field before passing it to the energy ministry for its perusal, a Ghanaian government source said today." [Upstream Online]