AGC Profond PSC

The AGC Profond Production Sharing Contract (PSC) covers a large offshore block (9,838 sq km) which straddles the Senegal and Guinea Bissau border and has water depths extending from 50m to 3500m. It is governed by the Agence de Gestion et de Coopération entre le Guinée Bissau et le Sénégal (AGC), a joint commission established to administer the maritime zone between Sénégal and Guinea Bissau. The PSC was signed on 2nd of August 2006, with Presidential ratification on 19th of September 2006.

The block has extensive 3D seismic coverage acquired in two earlier concession phases both of which expired without wells being drilled. The block has also now been tested with 4 CSEM lines which targeted key prospects. The Senegal and Guinea Bissau margin is relatively under-explored and few wells have been drilled to date. Current well coverage is limited mostly to the shallow water areas where oil discoveries have been made on both the Senegalese and Guinean shelf (Dome Flore and Sinapa-2). Recent drilling success in Ghana and in Brazil has increased the level of interest in this margin with Shell being a notable entrant to offshore Senegal. Shell has funded CSEM acquisition over the Sangomar Offshore, Rufisque Offshore and Sangomar Deep Offshore Blocks and will interpret the data prior to making the decision to farm in to a further well commitment.

Rocksource has now elected to proceed, under the terms of a Farmout Agreement dated 8th September 2008 with Ophir Energy plc, to enter into the Second Exploration Phase of the AGC Profond Production Sharing Contract (PSC). The will lead to the drilling of one exploratory well.

Prospectivity

The AGC Profond PSC contains several, commercially viable, low risk prospects. To date, 16 prospects have been mapped and these represent a total un-risked resource potential estimated at 1.7 Bboe. Four of these prospects have been tested by acquiring CSEM across them. The data was subsequently processed and interpreted using Rocksource’s proprietary technology. Results from three of these tests were positive and an additional, previously unidentified prospect was also detected.

The major reservoir intervals comprise a series of stacked Cretaceous aged, deep water fan systems. These systems were sourced from the African shield during the early opening of the Atlantic Ocean and are similar in seismic character to some major reservoirs found along the West African Margin. The risk on the presence of reservoir quality sand is considered moderate. There are a number of potential hydrocarbon source rock intervals which could supply hydrocarbons to the mapped traps and modeling suggests the presence of a working petroleum system. Source and migration however, is still considered the key risk for many of the prospects. The trapping structures were generated by the movement of more deeply buried salt. These salt structures have been mapped on good quality 3D seismic data and the risk associated with the presence of a structure is considered very low.

A typical, large salt induced structure

Risk Reduction

Rocksource acquired 4 CSEM lines across the two largest structures in the AGC Profond PSC during winter 2008, testing 4 prospects. The results of processing and interpretation of these surveys has revealed strong positive CSEM anomalies in three prospects and the presence of a fourth that was not previously mapped.

Prospect descriptions

Of the 16 prospects currently mapped in the AGC Profond PSC, 4 were tested with CSEM. These are summarized below.

Cheval North

Cheval North is the largest exploration target in the block. It is a large salt induced structure and contains a series of stacked deep-water reservoir targets. The CSEM results from two lines that cross the prospect show an extremely strong positive anomaly that conforms to the mapped structure.

Cheval North is currently the most likely candidate for the first well (Q3 2010) and contains an un-risked resource of 429 mmboe. After the processing of the CSEM data the prospect chance of success is considered to be above 50%.

Seismic line with processed CSEM overlain.

Prospect map showing the top structure and the CSEM response. Note the strong response over eastern structure and the trough between where new prospectivity has been identified. The western structure has weakened response and has downgraded prospectivity as a result.

Cheval North West

This prospect is a smaller structure found to the west of Cheval North. The results from the CSEM analysis are encouraging but weaker than that seen at the adjacent Cheval North. Of the multiple reservoir zones present within the trap only one has been interpreted to contain hydrocarbons. The prospect is estimated to contain an un-risked resource of 137 mmboe with a post-CSEM chance of success of approximately 30%.

Cygna

The Cygna prospect is a series of stratigraphically trapped, deep-water sands that lie in the trough between Cheval North and Cheval North West. The prospect was originally identified from a second, strong positive CSEM response that was observed in the line that tested Cheval North. Subsequent analysis of the seismic data support the presence of a thick interval of reservoir sand while the CSEM results suggests it is hydrocarbon filled. Cygna is an exciting addition to the prospectivity in the block adding 202 mmboe of un-risked resources and a new play concept. Lying on the flank of the large structure, Cygna would require a separate well to test but could ultimately share a development with Cheval North.

Combined CSEM and seismic line illustrating the strong response in the trough between the two structural highs which is interpreted as a new stratigraphic prospect. Seismic evidence suggest this is stacked deep-water sands

Croix de Sud South

The Croix de Sud South prospect lies in the southern part of the block and is a broad anticlinal structure. The CSEM results from the two lines that cross the prospect show a strong positive anomaly that indicate an increased chance of the presence of hydrocarbon.

Croix de Sud South contains an unrisked resource of 242 mmboe. After the processing of the CSEM data the prospect chance of success is considered to be just above 50%.

Croix de Sud West

This was a prospect that lies to the west of the Croix de Sud. Results of the CSEM analysis indicate that this prospect is unlikely to contain hydrocarbons. The presence of a negative CSEM response here, while disappointing, is encouraging as it indicates the positive response from Croix de Sud is unlikely to be a false positive related to the structure.

Combined CSEM and seismic data from the Croix de Sud prospect. Warm colours indicate a positive CSEM response. Note the lack of anomaly associated with the Croix de Sud West structure.

Remaining Prospectivity

In addition to the prospects that have been investigated with CSEM, the block contain a further 12 prospect that have been mapped and numerous leads. The chance of success in these prospects is currently between 10 and 15% but is also dependent on success in the larger prospects. The total unrisked resource in the additional 12 prospects is c. 750 mmboe.

Production Sharing Contract Summary

Exploration Period 3 years + 2 years + 2 years:

Phase I - Re-evaluate 3D and acquire CSEM

Work Programme: CSEM programme, re-evaluate legacy data and integrate results

Phase II - One exploration well to be drilled within 2 years

Work Programme: Drill at least 1 exploration well

Phase III - One exploration well to be drilled by within 2 years

Work Programme: Drill at least 1 exploration well

After expiry of exploration period, Contractor must hand back all of Contract Area, excluding any defined “exploitation perimeters”.

The fiscal terms for the contract are considered positive with an approximate government take of 60%.

Farm-In Terms

The farm in allows Rocksource AGC (Profond) AS ("Rocksource"), staged entry as it contributes to each of the three exploration phases. Rocksource has financed 100% of the cost of the first phase work programme which consisted of CSEM acquisition over four of the most prospective features and upon governmental approval will earn a 5% participating interest (5.6818% Paying Interest). The companies have also agreed a mechanism whereby Rocksource can earn up to a 25% participating interest (28.049% Paying Interest) in return for paying a disproportionate contribution towards the first and second exploration wells (2nd and 3rd Exploration Phases) if it decides to progress beyond the initial CSEM evaluation. If Rocksource elects not to progress into the 2nd exploration phase then it may elect to withdraw without earning any interest in the PSC and without any further financial obligation.

Ophir has entered into various rig share agreements giving it access to potentially more than 500 days of rig time on deepwater drilling rigs suitable for use in the AGC Profond PSC area. The PSC also allows for exit points at the end of each exploration phase.

Ophir is the block Operator holding an initial 88% equity share. L'Enterprise AGC S.A. (Enterprise) representing both countries holds the remaining 12% interest. Upon the normal governmental consents, the partnership will consist of the following: 

** L'Enterprise has an option to increase their beneficial interest by a further 5%, in the event of a discovery. Their current 12% stake is carried by the contractors through each exploration phase.
**This staged agreement gives Rocksource options to achieve a final 25 % working interest.

Current Status

Ophir, the PSC Operator, is currently planning for drilling the first exploration well in Q3 2010 and has entered into a Rig Sharing Agreement with ExxonMobil that provides access to three deep water drilling vessels (Seadrills’s West Polaris and West Aquarius and Petrolia Drilling’s Deep Venture). The West Polaris is currently expected to drill the first well on the PSC.

Last update May 2009