licence negotiations

As an Afren holder I listened to their interim results conference call earlier in the week and didn't really take on the significance of something what they said about their assets in CIV.

You may be interested to listen to this bit, its in the Q&A area around 45 mins into the conference call.

www.afren.com

They are asked a question on their CIV assets as they have agreed to sell one, but Osman Shahenshah (CEO) goes on to talk about CI-01. Apparantly, the CIV government are also renegotiating the terms on their CI-01 block, and he mentioned that the block will be split into 2 and extended towards the east to Ghana. Looking at the Afren website, this may then absorb some additional fields that have been discovered but not developed. If its extended to the east, this will likely take up some of the shallower areas directly north of Jubilee.

Now I know this has little to do with RIA, except that it would now appear that the licence discussions may be more to do with a much larger change of philosophy and ownership by the CIV government, but my speculation is that perhaps the owners of all these blocks, may be consumed together and pick up parts of mutliple blocks, but surrender some of their current interests.

IMO for RIA this woyld be perfect as it would reduce their direct cost impacts and therefore have a lower impact on cashflow, but would provide a far bigger exploration / appraisal / development scenario, which as we know from what RS keeps talking about, the CIV government are intent on gas production and if this leads to a much larger gas development than just CI-202 then this would be a BIG win for the CIV government.

Just on a side notte, Afren rarely talk about PSC terms, but note that they have done very little on their CI-01 licence over the last few years, but they sounded very upbeat about the licence, no talk about losing the licence but I would have assumed that the PSC terms would have had some guidance over the last few years as to what was required, so this gives me more confidence that RIA will not lose the licence and may well end up with a bit of a surprise with regards to the licence / licences that we end up with.

Worth thinking about at least