Morocco’s emerging oil industry could see a step-up in corporate activity, according to investment banking heavyweight Citi.
In a note today Citi said it sees the potential for an increase in farm-outs with new entrants buying interests in projects and possibly in smaller companies as well.
Analyst Michael Alsford describes Morocco as an ‘under-explored hydrocarbon province’ and he says it offers ‘high-impact exploration opportunities across multiple play-types’.
Additionally he points out that there is now limited unlicensed acreage available and that may be a factor leading to an increase in corporate transactions.
“The material resource potential coupled with attractive fiscal terms has seen a recent pick-up in corporate activity in the region with larger independents (Genel Energy and Cairn Energy) and IOCs (Chevron, Total and Galp) securing offshore acreage,” Alsford said.
The analyst adds: “We expect that farm-out (and possibly M&A) activity is likely to increase as we move closer to drilling activity, which is planned from the fourth quarter of 2013 in the offshore.
“Smaller independents are also likely to seek to reduce their current equity interests and obtain a partial carry on their share of drilling costs. We estimate the well cost will range from US$60-100m depending on water depth.”
Alford also explains that there will be a notable increase in drilling with 10 wells planned, starting in the fourth quarter this year, through 2014. This compares with just 50 wells drilled, mostly onshore, in the country since 2000.
The likes of Cairn, Genel, Kosmos and Chevron will take the lead offshore. And juniors Fastnet, Pura Vida and Tangiers Petroleum have exposure to some of these projects.
Meanwhile, onshore Gulfsands Petroleum, Circle Oil and Longreach Oil & Gas are among those with drilling plans.
|proactiveinvestors.com.au
