Pura Vida splits risk with rig contractor in Gabon

24 January 2017, Week 03, Issue 673

Australia’s Pura Vida Energy has struck a deal with an unnamed rig contractor, which will cover the costs of a three-well programme on the Loba oilfield, offshore Gabon. The plan was announced on January 19 and demonstrates how companies are seeking new ways in which to carry on with exploration at a time when new potential partners are thin on the ground. 

The contractor has agreed to carry out a three-well programme on the Nkembe block. This should begin in the second half of 2017 and take around three or four months. In exchange, the rig provider would take a royalty from any fields discovered during the campaign that are brought into production. Pura Vida will keep its 100% stake in Nkembe. 

The royalty interest could be converted into direct equity, before a final investment decision (FID) is taken on development of discovered fields. 

The rig owner will cover the costs of around US$20 million. The deal is conditional on Pura Vida lining up funds for the balance of the costs, also estimated to be US$20 million, in addition to obtaining the required regulatory approvals. 

The Australian minnow said it had begun talks with potential partners on lining up such funding. 

The first well will target the Loba discovery and the Loba Deep prospect, with a planned drill stem test. According to figures from Pura Vida, the Loba area may hold 34 million barrels, with another 12 million barrels of contingent resources. 

The second and third wells will be chosen by Pura Vida. Potential targets include Loba East, Lepidote Deep, Pompano and Palomite Deep. Pompano has been estimated to have mean recoverable resources of 79 million barrels, while Palomite Deep has a potential 332 million barrels of gas or condensate. 

The rig contractor will also have an option to acquire 10% of Pura Vida’s capital, although the terms for such a deal were not provided. 

Pura Vida’s deal is, in some respects, similar to BW Offshore’s purchase of Gabon’s Dussafu field from Harvest Natural Resources. BW’s deal was lower risk, in that the vessel operator has come in at a point when it is a question of overseeing the development. In both instances, though, the assets are relatively simple to make progress on and in both cases the oil company was unable to stump up the cash needed to make progress.