A blast from the past, but a good reminder of what we have in the JDZ...
Excerpts from ADDAX PETROLEUM CORP Capital Markets Days-Toronto - Final (Broadcast transcript) March 24, 2009
Jeff Schrull's comments on the JDZ (I believe this was the last we heard from Jeff before Sinopec's buyout). Details of note bolded:
JEFF SCHRULL: Kind of hard to segue from Kurdistan to the deepwater Gulf of Guinea, but I'll do my best. We have discussed with you guys every time we've been here our deepwater portfolio. I think everybody knows we are quite excited about it.
There are two key things that have happened to move our portfolio into the realization phase, I guess you could call it; we are going to actually drill some wells. We got the rig called the Deepwater Pathfinder, one of the best drill ships in the world, under contract for four slots, and we're going to start drilling probably near the end of the third quarter this year. And we've also completed our 3-D seismic program over Block 291.
The numbers you see there are working interest numbers, roughly 500 million barrels on a risked basis. So we would anticipate that our deepwater exploration program could quite easily double the size of the Company.
That is our wonderful drill ship -- or not ours, it's Transocean's -- but it's going to be ours for 120 days anyway. It feels like mine.
A couple comments. The day rate is CAD600,000 a day, but it is an extremely sophisticated piece of equipment. You can do dual operations, so we are anticipating a 15% to 20% cost reduction in our wells even though the day rate is higher than what we had quoted previously for the Aban Abraham. It is currently drilling in Nigeria, so there is very low mob costs; basically it just needs to steam from Nigeria down to the JDZ.
A couple things. We are -- geologically, our deepwater portfolio is in a completely different region than all of our shallow-water fields. The Niger Delta is basically loading -- this entire part of the region is under extension, and basically everything is sliding out into the deepwater and our deepwater Blocks 291 and the JDZ blocks are in the compressional belt out in front of the Delta itself.
The Joint Development Zone is here. That's the island of Sao Tome, the island of -- excuse me, that's the island of Principe here. The island of Sao Tome is a bit off the map to the south. But the Joint Development Zone is 40% owned, you could say from Sao Tome Principe and 60% Nigeria. And we deal with the JDA, which is the governing body for the Joint Development Zone.
This is -- start with the JDZ portfolio. CAD800 million is our best working interest estimate from Netherland, Sewell. You can see our working interest equities by block. In three of the blocks, we have a carry of our partner, ERHC in Blocks 2, 3 and 4. We have excellent seismic data. It has been reprocessed about 15 times now, I think, the whole survey. And we've reprocessed it -- over prospects, Anadarko reprocessed Block 3; Sinopec has done Block 2; Chevron has done Block 1. This is probably the most processed 3-D survey in history, I think.
Multiple structural closures, well-documented HCIs. I have been associated with the JDZ since before it was even formed back in 2000, when I was at Chevron. People have seen these HCIs forever, and we are finally going to get to see what they are.
This is the structure map over one of the key horizons. This is actually the oil sand that was drilled in the Obo well. The traps that are going to be drilled are hanging wall folds. I've got a 3-D image of this coming next.
But basically the Bomu hanging wall, the Kina hanging wall and the Lemba hanging wall are the approved prospects for those three blocks. The first well we are going to drill with the Pathfinder is going to be Kina, and then the rig will go to Sinopec, and they are going to drill Bomu as a second well. The third and fourth wells, we are keeping our options open.
A bit about the geology of the JDZ. This is a 3-D rendering looking from the South. And you can see the key folds at Kina, Malanza, Lemba. This big feature here is actually still moving, so the whole Delta is sliding to the South. And what this creates is the ability for all the structuring and the shortening to take place here. It's a bit like an anode on a platform.
So all of these structures stopped moving roughly 3 to 4 million years ago. Our model is that the [Okada] force is in the oil generation window today, not the gas generating rating window, and that these folds can all have been charged in the last 4 to 5 million years.
They are not subtle. This is the seismic line through Kina. We are going to test a series of beautiful HCI that the geophysicists love to gaze upon. And there is actually a series of HCIs as you go through this whole section.
These sands that you see here we've mapped back to the Obo well. And we think there are extensive basin floor fans that cover the entire JDZ. One of the reasons we like the region, we don't feel it is a channelized sort of depositional environment like you sometimes encounter in deepwater, which creates appraisal nightmares.
We feel like these sands extend over the whole JDZ, and they were pre-structuring; so basically, there was a flat basin floor, you laid down the sands and then the structures formed -- and hopefully filled up with oil in the last few million years.
Bomu, this is going to be number two on the queue. Beautiful anticlinal structure in the hanging wall part of the block. You can see the amplitude map here conforms to the structure. That is what we call direct hydrocarbon indicators. Gas versus oil, from the modeling we've done in the Obo well, they look very similar. [High-G ore oil] looks pretty much identical to gas on seismic data. Bomu also has flat spots and some amplitudes at several horizons.
So the stratigraphy here is almost the exact same age as the stratigraphy that we are going to drill at Kina. And you can see from the seismic character that these are extensive sands; they are not channelized. That's a big part of our interest in the area.
...
UNIDENTIFIED AUDIENCE MEMBER: Just a question for Jeff. What are the risks of having natural gas as opposed to oil in the JDZ, particularly in Kina? What can you tell us about that?
JEFF SCHRULL: Well, 50-50. I'll give you the analytical answer. It is 50-50. When you look at our portfolio risk, most of the deepwater stuff has about a 35% or 40% risk put on it. So I guess we are 80% sure that we are going to find something and we are 50% sure it is going to be oil. So it's a 35% to 40% composite risk.
...
UNIDENTIFIED AUDIENCE MEMBER: Just so I'm clear on the Deepwater Pathfinder drill ship, are the four slots all under your direction? And can they be used on 291, as well, or are they specifically targeted for JDZ?
JEFF SCHRULL: The answer to your first question is yes, all four slots Addax has under contract. Our intention is to assign one of the slots to Sinopec to drill Block 2, to drill the Bomu well. And we are in the process of getting all the various approvals for that.
Slots 3 and 4 we will use to further drill up our deepwater portfolio. We could drill in 291, we can drill in the JDZ. We can effectively use them as we strategically see fit.
UNIDENTIFIED COMPANY REPRESENTATIVE: I think, Jeff, it is clear to say 291 is a very strong possibility of the fourth slot, probably.
[My comment: Addax used all drill slots for the JDZ, not Block 291. That is noteworthy.]
...
UNIDENTIFIED AUDIENCE MEMBER: Jeff, beyond 2010, assuming you hit in the JDZ or 291, what is the likelihood of you getting Pathfinder or another rig to continue beyond the four slots? Are you already working on that, and what is the likelihood of continuous development?
JEFF SCHRULL: We are part of a -- we are currently looking for another rig. We are part of a rig share club with Chevron and some other operators in the Gulf of Guinea. We are going to go out to tender as a rig share club. We've signed up for an appropriate number of slots for our work. So we've already started the process for the next drill ship that we are going to need.
And I don't think the prices are going to come down significantly, but there is -- there are more drill ships available than there were, say, six to eight months ago. I think everybody is looking at their portfolio and thinking about what are my commitments, what is my discretionary versus nondiscretionary spends. And there is -- the market is getting a little looser than it was.
So I think with our approach, teaming up with other operators, we will go get a drill ship for two or three years, whatever the appropriate total program is. And that gives you flexibility to move it around within the consortium to drill everybody's wells when it is most appropriate.
- Longtimer
AI
