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Vietsovpetro makes fresh offshore oil field discovery

Update: July, 04/2012 - 10:45

BA RIA-VUNG TAU — The Vietnamese-Russian oil and gas joint venture Vietsovpetro said on Monday it had discovered a new oil supply at the Tho Trang (White Rabbit) structure, in lot 09-1 to the northwest of Bach Ho (White Tiger) oil field.

Vietsovpetro deputy general director Le Viet Hai said the oil flow of 1,690 barrels a day was discovered at a depth of 3,500-3,650m in well ThT-1X in the Tho Trang structure. The new oil site was in a separate geological structure in lot 09-1, Hai said.

The joint venture was scheduled to test four other potential sites in the upper layers of the well.

After well ThT-1X, Vietsovpetro would drill well ThT-2X to make an assessment for the oil and gas reserve in Tho Trang structure and conduct further economic and technical solutions to exploit the supply in 2013, Hai said.

Oil acquisitions

Essar Energy Plc, a world-class, low-cost, integrated energy company focusing in India, agreed to sell a 50 per cent stake in an offshore gas exploration block in Viet Nam to Eni S.p.A, an Italian multi-national oil and gas company.

Eni will assume operator status for the block under the terms of the transaction. Further investment is required to establish gas reserves in the block and no gas is being produced at present, according to Reuters.

The Block 114 is located in shallow waters off the coast of Viet Nam and has undiscovered inplace resources of about 1 trillion cubic feet of gas, equal to 28.3 million cu.m of gas. However, the acquisition's value was not disclosed.

In another move, share price of the UK Soco International Plc (SIA) rose in London on plans to buy out the minority partner in its main oil subsidiary in Viet Nam, according to Bloomberg.

SIA advanced 6.9 per cent to 309.4 pence. It earlier jumped as much as 10 per cent.

London-based Soco planned to pay US$95 million for the 20 per cent stake owned by Lizeroux Oil&Gas Ltd at Te Giac Trang (White Rhino) offshore Viet Nam, according to Soco's statement.

Soco and its partners plan to boost output by 38 per cent to 55,000 barrels a day from the Te Giac Trang (TGT) fields by starting the second platform off Viet Nam in August.

"It's a great asset and we basically, if you look at the metrics of what people have been paying for things in Viet Nam, we've paid about half as much for this interest because of our majority interest," Chief Financial Officer Roger Cagle told Bloomberg yesterday in a phone interview. "It's a sweet deal for us."

Investors are concerned that the production target at TGT may not be met, Tao Ly, a London-based analyst at Nomura International Plc, wrote in an e-mailed report. If output targets are met, Soco will generate $780 million in cash by the end of 2015 on its balance sheet at $95 a barrel oil price.

It plans to expand exploration in Viet Nam and is examining opportunities in West Sub-Saharan Africa and Southeast Asia.

Directors will consider paying a special dividend in the second half with production ramping up in Viet Nam. Soco has already begun a buyback program to return funds to shareholders.

"Many of the managers and directors of this company have a number of shares and we've never taken any money off the table," Cagle said. "We are not an investment company. The cash builds up and if we can't increase the value of our portfolio, then we will distribute back to shareholders."

Lizeroux is majority-owned by former Soco manager Nguyen Hoang Hai, who helped the company to set up business in Viet Nam. — VNS

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