GLOBALOILS：TESTINGKENYA'SOFFSHOREOPPORTUNITY0816

1、deutsche bank markets research global oil was drilled by total in 1978 in c1,000m of water. the well was plugged and abandoned after encountering gas shows in the tertiary and cretaceous. this well is of more than passing interest given it is located on the northern border of what is now block l10a

2、(bg, premier, cove and pancontinental), and so provides the partners on that licence with a valuable calibration point. however, we do not believe the result reflects negatively on the prospectivity of l10a and l10b with the benefit of modern seismic analysis and updated basin studies it appears tha

3、t this well was not drilled on the culmination of the high (only one of a number of potential plays thought to exist on block) it was targeting. figure 5: kenya drilling activity timelinefigure 6: wells drilled by basin 35 30 25 out of 34 wells drilled, 85% were drilled before 1990 11 2 002 1 3% 6%

4、9% lamu embayment unclassified basin 20 15 10 5 7 2 3 3 2 6% 76% tanzanian coastal somali - ogaden - mandera lugh 0 north - central gregory rift source: wood mackenzie, deutsche banksource: wood mackenzie, deutsche bank the most recent offshore drilling was by woodside on the pomboo prospect (block

5、l5) in 2007. the well was plugged and abandoned after encountering over 200m of moderate to good quality sandstones, but no hydrocarbons. after this disappointment, the partnership elected not to drill a follow up well on the sokwe prospect (l7). in a regional context, kenya lags far behind its east

6、 african neighbours in terms of drilling activity and success rates. a 3% success rate (the onshore ngamia discovery) on 34 wells drilled represents a disappointing return compared to a total of 762 wells across east africa and an average success rate of 43% (dominated by onshore discoveries in suda

7、n). it is likely that this record will improve going forward as activity page6deutsche bank ag/london madagascar tanzania somalia sudankenya mozambiquesouthsudan namibiaethiopia uganda 14 august 2012 exploration although this was associated with one shallow water prospect mapped at the time the lice

8、nces were acquired. since then the focus has shifted towards maturing leads and prospects in deeper water areas, with encouraging early results. we therefore assume a combined l17/l18 prospective resource of 500mmbbls in our calculations. four companies have 100% owned acreage positions offshore ken

9、ya afren, eni, ophir and total. unsurprisingly, using these levels of equity in the analysis leads to a significant level of unrisked upside, even for top tier iocs eni and total. however, it is highly unlikely in our view that any of the three companies will drill at a 100% interest. for comparison

10、 (see chart), we have included an us$80/bbl adjusted scenario in which we assume afren farms down to 50% pre-drill on l17/l18 and ophir farms down to 35% on both l9 (from 60%) and l15 (from 100%). eni and total are assumed to farm down to 40% on respective deep/ultra deep licences. figure 17: offsho

11、re kenya exploration valuation db price deck of us$110/bbl lt gross acreagenet acreageaveragenet prospectivenet npv10net npv10currentas a % of position (sq km) position (sq km) equity interestresource (mmbbls)(us$bn)(local, bn)market capcurrent mkt (bn, local)cap afren anadarko apache bg eni ophir p

12、remier tullow total us$ us$ 4,672 30,885 5,115 10,547 35,000 7,441 10,547 5,115 40,885 4,672 13,898 2,558 4,498 35,000 5,397 2,389 767 20,810 100% 45% 50% 43% 100% 73% 23% 15% 51% 500 4,169 767 1,349 10,500 1,619 717 230 6,243 3.6 30.0 5.8 9.7 71.4 11.7 5.2 1.7 42.5 2.3 30.0 5.8 6.2 58.5 7.4 3.3 1.1

13、 34.8 1.5 34.1 33.2 43.6 64.3 2.1 2.1 12.1 92.0 158% 88% 18% 14% 91% 359% 156% 9% 38% source: deutsche bank figure 18: offshore kenya exploration valuation us$80/bbl lt gross acreagenet acreageaveragenet prospectivenet npv10net npv10currentas a % of position (sq km) position (sq km) equity interestr

14、esource (mmbbls)(us$bn)(local, bn)market capcurrent mkt (bn, local)cap afren anadarko apache bg eni ophir premier tullow total us$ us$ 4,672 30,885 5,115 10,547 35,000 7,441 10,547 5,115 40,885 4,672 13,898 2,558 4,498 35,000 5,397 2,389 767 20,810 100% 45% 50% 43% 100% 73% 23% 15% 51% 500 4,169 767

15、 1,349 10,500 1,619 717 230 6,243 1.7 14.0 2.7 4.5 33.6 5.4 2.4 0.8 20.0 1.1 14.0 2.7 2.9 27.5 3.5 1.5 0.5 16.4 1.5 34.1 33.2 43.6 64.3 2.1 2.1 12.1 92.0 74% 41% 8% 7% 43% 167% 72% 4% 18% source: deutsche bank deutsche bank ag/londonpage15 14 august 2012 exploration resulting in an aggregate 15% int

16、erest with potential to extend to 20%. tullow has the smallest offshore kenya acreage position of our coverage universe, both in terms of number of licences and overall area. this, in our view, is at odds with tullows historical strategy for entering new basins the company has tended to move early t

17、o cherry pick the most attractive blocks, which have then been de-risked once the play has been proved up. this has yielded significant success in the west africa transform margin, onshore uganda and most recently french guiana and onshore kenya. to be fair to tullow, the isolated interest in l8 may

18、 be on purpose for example the company could be taking a view that the surrounding licences may not be as oil prone. however, in the event that mbawa was successful and de-risked a regional oil trend, it would be difficult to see how tullow could upsize its kenya exposure further at a reasonable cos

19、t. deutsche bank ag/londonpage25 14 august 2012 exploration downside risks include australian project delays. deutsche bank ag/londonpage27 1. 6. 1. 6. 14 august 2012 exploration as a result, the recommendations may differ and the price targets and estimates of each may vary widely. in august 2009,

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