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IOCs in Iraq need Oil Wealth to Trickle Down

From Amwaj Media. Any opinions expressed are those of the author(s), and do not necessarily reflect the views of Iraq Business News.

Why foreign oil companies in Iraq need oil wealth to trickle down

Iraq’s oil wealth is among the greatest on the planet.

Total proven crude reserves are estimated at 150 billion barrels, and daily output is over 4.6 million barrels-making it the fifth-largest producer in the world.

But much of this wealth does not trickle down, and that is perhaps paradoxically particularly the case in the oil-rich south.

The full report can be viewed here (registration required).

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DNO Updates Oil Reserves

By John Lee.

DNO ASA, the Norwegian oil and gas operator, today announced it exited 2021 with 321 million barrels of oil equivalent (MMboe) of net proven and probable (2P) reserves, notwithstanding production of 34 MMboe during the year. The Company’s 2P reserves life stood at 9.3 years. Combined with contingent (2C) resources of 189 MMboe, DNO’s reserves and resources life stood at 14.8 years.

Of the total, the Company’s Kurdistan portfolio accounted for 267 million barrels of oil (MMbbls) of net 2P reserves compared to 295 MMbbls in 2020, and 71 MMbbls of net 2C resources compared to 27 MMbbls at yearend 2020.

Across its North Sea portfolio at yearend 2021, DNO’s net 2P reserves stood at 54 MMboe compared to 64 MMboe a year earlier. 2C resources totaled 113 MMboe compared to 120 MMboe at yearend 2020.

Effective from 2021, the Company reports its net production, reserves and resources based on the participation interest in all of its licenses. Prior to 2021 and for the licenses governed by Production Sharing Contracts, the Company reported its net figures after royalty and included DNO’s additional share of cost oil covering its advances towards the government carried interest (if any) as well as volumes attributed to the three percent of gross Tawke license production under the August 2017 Receivables Settlement Agreement. The main reason for the change is to improve comparability with peer companies and to show the Company’s share of production before the government take.

International petroleum consultants DeGolyer and MacNaughton carried out an independent assessment of the Tawke and Baeshiqa licenses in Kurdistan. Gaffney, Cline & Associates carried out an independent assessment of DNO’s licenses in Norway and the United Kingdom.

Full report here.

(Source: DNO)

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Genel Energy Updates its Oil Reserves

By John Lee.

Genel Energy plc has updated its oil reserves across its portfolio.

Net oil Reserves (MMbbls) 1P 2P 3P
31 December 2020 69.4 117.2 177.2
Production (11.6) (11.6) (11.6)
Technical revisions 4.8 (1.4) (28.9)
31 December 2021 62.6 104.2 136.6

International petroleum consultants DeGolyer and MacNaughton, working on behalf of the operator DNO, assess that Tawke licence (Genel 25% working interest) gross year-end 2021 2P reserves stood at 357 MMbbls, compared to 394 MMbbls at year-end 2020, after adjusting for production of 40 MMbbls and an upward technical revision of 3 MMbbls.

Pending further analysis of the performance of the Enhanced Oil Recovery project, Genel continues to hold 23 MMbbls of those 2P gross reserves in 2C resources.

At Taq Taq (44% working interest, joint operator), 2P gross reserves stood at 26 MMbbls at year-end 2021 (33 MMbbls at end-2020), following a downward technical revision of 5 MMbbls and production of 2 MMbbls. McDaniel & Associates carried out the independent assessment of the Taq Taq licence.

At Sarta (30% working interest, operator) Genel’s gross 2P reserve estimate relating to Phase 1A of the Sarta development remains unchanged, less production, at year-end 2021 at 32 MMbbls (34 MMbbls at the end of 2020), following production of 2 MMbbls.

Flow testing of Sarta-1D is currently ongoing, and the appraisal results of Sarta-5 and Sarta-6 will be incorporated into our assessment of the reserves of Sarta at the appropriate time.

(Source: Genel Energy)

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Genel Energy Updates on Oil Reserves

Genel Energy has issued an update on oil reserves and resources across its portfolio.

Bill Higgs (pictured), Chief Executive of Genel, said:

“The quality of our reserves is the foundation of our resilient business model, providing us with low-cost production that can generate cash for many years to come.

“Drilling at Sarta this year has the potential to add to our reserves, with Qara Dagh adding the possibility of opening up another field in the Kurdistan Region of Iraq, as we look to further build our cash generative portfolio for the benefit of all stakeholders.“

Net oil reserves (MMbbls) 1P 2P 3P
31 December 2019 68.8 123.8 194.9
Production (11.7) (11.7) (11.7)
Technical revisions 12.2 5.0 (6.0)
31 December 2020 69.4 117.2 177.2

International petroleum consultants DeGolyer and MacNaughton assess that, at the Tawke field on the Tawke licence (Genel 25% working interest), gross year-end 2020 1P reserves stood at 173 MMbbls, compared to 176 MMbbls at year-end 2019, after adjusting for production of 21 MMbbls and an upward technical revision of 18 MMbbls. Tawke field 2P reserves stood at 245 MMbbls (261 MMbbls at end-2019) and 3P reserves at 359 MMbbls (376 MMbbls at end-2019).

The Enhanced Oil Recovery project at the Tawke field has started to deliver a positive impact on production. Pending further work on the project, the 23 MMbbls of 2P and 45 MMbbls of 3P gross reserves that DeGolyer and MacNaughton previously included in their figures continues to be maintained by Genel in 2C and 3C resources.

At Peshkabir, also on the Tawke licence (Genel 25% working interest), year-end 2020 gross 1P reserves were assessed at 61 MMbbls (51 MMbbls at end-2019), 2P reserves at 116 MMbbls (125 MMbbls at end-2019) and 3P reserves at 201 MMbbls (220 MMbbls at end-2019). The upward revision of 1P and 2P reserves by 29 MMbbls more than offsets production of 19 MMbbls, and is the result of continued outstanding field performance in 2020.

At Taq Taq (44% working interest, joint operator), 1P gross reserves stood at 18 MMbbls at year-end 2020 (20 MMbbls at end-2019), following a minor technical upward revision of 1 MMbbls and production of 4 MMbbls. Gross 2P reserves stood at 33 MMbbls (44 MMbbls at end-2019), with a downward revision of 8 MMbbls following a reduction to the number of wells planned for the future, and their associated expected productivity. McDaniel & Associates carried out the independent assessment of the Taq Taq licence.

Genel’s gross 2P reserve estimate relating to Phase 1A of the Sarta development remains unchanged at year-end 2020, standing at 34 MMbbls.

CONVERTING RESOURCES TO RESERVES

Net oil resources (MMbbls) 1C 2C 3C
31 December 2019 66.5 152.0 345.8
Technical revisions (8.6) (8.6) (8.0)
31 December 2020 57.9 143.4 337.8

There has been no change to the ERCE view on Sarta (30% working interest), with an estimated mid-case total recoverable oil resource of 593 MMbbls, of which 258 MMbbls are classified as 2C resource. Production performance in 2021, and the results of the upcoming three well campaign in 2021, will inform the quantity of conversion of these resources into reserves.

At Qara Dagh (40% working interest, operator) the QD-2 well will test the crestal portion of the prospect, which has a mean prospective resource estimated by Genel at c.400 MMbbls. Genel continues to estimate that the downdip segment tested by the QD-1 well defines a 2C resource of 47 MMbbls.

(Source: Genel Energy)

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GKP issues Update on Shaikan Field

Gulf Keystone Petroleum (GKP) has provided a Competent Person’s Report (“CPR”) update on the Shaikan Field in which it has an 80% working interest.  

The CPR, an independent third-party evaluation of the Company’s reserves and resources as at 31 December 2020, was prepared by ERC Equipoise (“ERCE”).

Jon Harris, Gulf Keystone’s Chief Executive Officer, said:

“The updated CPR demonstrates the continuing long-term strong performance of the Shaikan Field with gross 2P+2C reserves and resources volumes in line with the 2016 CPR, after adjusting for production over the period.   

“Prior Company estimates are reaffirmed with gross 2P+2C reserves and resources of c.800 MMstb at 31 December 2020, including over 500 MMstb of gross 2P reserves.  

“We have a deep understanding of the Shaikan Field that has produced over 80 MMstb to date and are pleased that the latest CPR matches our interpretation and understanding of the geological model, underlining the considerable untapped potential of the field.”

“We had a strong start to the year in January, which saw GKP’s highest monthly average daily gross production of 44,405 bopd.  As conditions continue to improve, we look forward to resuming the 55,000 bopd expansion project and shareholder distributions.”  

Highlights

  • The CPR incorporates significant incremental information, including an updated development plan, new wells, production data and further technical analysis, since the last CPR was prepared by ERCE in 2016.
  • Gross 2P reserves + 2C contingent resources1 of 798 MMstb2 at 31 December 2020 are consistent with volumes as at 31 December 2019, adjusted principally for 2020 production.
  • Gross 1P reserves increased to 240 MMstb, up 33% after adjusting for 2020 production.
  • Gross 2P Jurassic reserves were revised down marginally (2%) to 505 MMstb, after adjusting for 2020 production. 
  • Gross 2P Triassic and Cretaceous reserves of 47 MMstb were reclassified to gross 2C contingent resources1, while the Field Development Plan is progressed with the Ministry of Natural Resources.
  • Shaikan continues to deliver stable production with average gross production in January of 44,405 bopd, the highest monthly average to date from the field.
  • The Shaikan Field has significant future production potential with a gross 1P reserves life index3 of c.15 years and a gross 2P reserves life index3 of over 31 years, assuming January 2021 production levels.

Gross reserves and resources based on the Company’s estimates at 31 December 2019 and the CPR at 31 December 2020 were:

31 December 2020

1P

2P

2C 1

2P+2C 2

Formation (MMstb)

  Reserves

Resources

Jurassic

240

505

80

585

Triassic

–

–

157

157

Cretaceous

–

–

56

56

Total – Gross

240

505

293

798

31 December 2019

1P

2P

2C 1

2P+2C 2

Formation (MMstb)

  Reserves

Resources

Jurassic

  175

  531

  80

  611

Triassic

  18

  44

  106

  150

Cretaceous

  1

  3

  53

  56

Total – Gross

  194

  578

  239

  817

The reconciliation of changes in reserves and resources between the Company’s estimates at 31 December 2019 and the CPR at 31 Decemer 2020 is as follows:

 

 

1P

2P

2C 1

2P+2C 2

Gross (MMstb)

  Reserves

Resources

31 December 2019

  194

  578

  239

  817

Production

(13)

(13)

  – 

(13)

Reclassifications

(19)

(47)

  +47

  – 

Revisions

  +78

(13)

  +7

(6)

31 December 2020

  240

  505

  293

  798

GKP’s 80% net WI4 share of reserves and resources at 31 December 2020 were: 

1P

2P

2C 1

2P+2C 2

Formation (80% WI) (MMstb)

  Reserves

Resources

Jurassic

  192

  404

  64

  468

Triassic

  – 

  – 

  125

  125

Cretaceous

  – 

  – 

  45

  45

Total – Net WI

192

404

  234

638

1.  Contingent resources volumes are classified as such because there is technical and commercial risk involved with their extraction. In particular, there may be a chance that accumulations containing contingent resources will not achieve commercial maturity. The 2C (best estimate) contingent resources presented are not risked for chance of development.

2.  Aggregated 2P+2C estimates should be used with caution as 2C contingent resources are commercially less mature than the 2P reserves.

3.  Reserves life index is calculated as gross 1P reserves or gross 2P reserves, as appropriate, divided by annualised January 2021 gross production.

4.  Net working interest reserves and resources do not represent the net entitlement resources under the terms of the PSC.

 (Source: GKP)

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DNO Adds New Oil Reserves

DNO ASA, the Norwegian oil and gas operator, has announced it replaced 87 percent of 2020 production through additions to its proven (1P) reserves notwithstanding reduced activity in the wake of low oil prices.

In the Kurdistan region of Iraq, the Company replaced 111 percent of last year’s production through additions to 1P reserves.

Yearend 2020 Company Working Interest (CWI) 1P reserves totaled 201 million barrels of oil equivalent (MMboe) compared to 206 MMboe at yearend 2019, after adjusting for 35 MMboe of production and 30 MMboe of upward technical revisions.

DNO exited the year with 332 MMboe of CWI proven and probable (2P) reserves and 507 MMboe of CWI proven, probable and possible (3P) reserves. DNO’s CWI contingent (2C) resources stood at 152 MMboe.

At yearend 2020, DNO’s 1P reserves life stood at 5.8 years, its 2P reserves life at 9.6 years and its 3P reserves life at 14.6 years; all were up slightly from 2019 levels.

On a gross basis, yearend 1P reserves at the Tawke license in Kurdistan containing the Tawke and Peshkabir fields climbed to 234 million barrels of oil (MMbbls) from 228 MMbbls a year earlier. Tawke license 2P reserves stood at 394 MMbbls at yearend 2020 (400 MMbbls in 2019) and 3P reserves at 605 MMbbls (641 MMbbls in 2019).

Across its North Sea portfolio at yearend 2020, on a CWI basis, DNO’s 1P reserves stood at 41 MMboe, 2P reserves at 64 MMboe and 3P reserves at 96 MMboe. The Company’s North Sea 2C resources totaled 120 MMboe.

At yearend 2020 and on a gross basis, at the Baeshiqa license in Kurdistan containing two large structures with multiple independent stacked target reservoirs, 2C resources stood at 43 MMbbls, following successful drilling and testing of the exploration Baeshiqa-2 and Zartik-1 wells. No reserves were recorded at the Baeshiqa license at yearend 2020 pending conclusion of the ongoing appraisal activities to determine commerciality.

“All things considered, from a reserves replacement perspective DNO had a stellar year in 2020 notwithstanding the sharp cuts in our spend and the challenges of keeping operations going in the face of Covid restrictions in movement of our people, contractors and supplies,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman.

International petroleum consultants DeGolyer and MacNaughton (D&M) carried out an independent assessment of the Tawke and Baeshiqa licenses in Kurdistan. Gaffney, Cline & Associates (GCA) carried out an independent assessment of DNO’s licenses in Norway and the United Kingdom.

(Source: DNO)

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Genel Energy Update on Oil Reserves

Genel Energy plc has updated its oil reserves and resources across its portfolio.

Bill Higgs (pictured), Chief Executive of Genel, said:

“Genel’s producing assets are profitable even at an oil price of $30/bbl and this, coupled with our robust balance sheet, supports investment in growth and the payment of a material dividend. The reduction of reserves at Tawke largely relates to production towards the end of the life of the field, and consequently our mid-term production outlook is materially unchanged and there is no reserves impact on our business plan.

“Our production funds an approved but flexible capital programme that, in the right market conditions, enables us to drill the wells necessary to evaluate the potential to convert the 2C oil resources in our portfolio, validated for the first time by ERCE, into reserves and production, boosting our cash generation potential.“

Net oil reserves (MMbbls) 1P 2P 3P
31 December 2018 99.3 154.9 219.3
Production (13.2) (13.2) (13.2)
Technical revisions (17.2) (17.8) (11.2)
31 December 2019 68.8 123.8 194.9

International petroleum consultants DeGolyer and MacNaughton assess that on a gross basis, at the Tawke licence in the Kurdistan Region of Iraq containing the Tawke and Peshkabir fields, year-end 2019 1P reserves stood at 228 MMbbls, compared to 348 MMbbls at year-end 2018, after adjusting for production of 45 MMbbls and a downward technical revision of 75 MMbbls. Tawke licence 2P reserves stood at 400 MMbbls (502 MMbbls in 2018) and 3P reserves at 641 MMbbls (697 MMbbls in 2018).

Broken down by field, Tawke field gross 1P reserves stood at 176 MMbbls (294 MMbbls in 2018), 2P reserves at 284 MMbbls (376 MMbbls in 2018) and 3P reserves at 421 MMbbls (477 MMbbls in 2018). Peshkabir field gross 1P reserves stood 51 MMbbls (54 MMbbls in 2018), 2P reserves at 116 MMbbls (126 MMbbls in 2018) and 3P reserves at 220 MMbbls (unchanged from 2018).

Genel continues to take a conservative view of the Enhanced Oil Recovery project at the Tawke PSC, and will look to book reserves in relation to the project, which has the potential to increase recovery over the life of field, once enhanced performance has been demonstrated at the field.DeGolyer and MacNaughton has included23MMbbls of 2P and 45 MMbbls of 3P gross reserves, working interest portions of which are not included in the table above.

At Taq Taq, there is a minor technical downward revision of 2.1 MMbbls of gross 2P reserves associated with the unsuccessful TT-33 well, and these now total 44 MMbbls, with gross 1P reserves increasing by 3.3 MMbbls to 20.1 MMbbls, illustrating the continued strong underlying performance of the asset. McDaniel & Associates carried out the independent assessment of the Taq Taq licence.

Genel’s gross 2P reserves estimate relating to Phase 1A of the Sarta development remains 34.3 MMbbls.

CONVERTING RESOURCES TO RESERVES

Net oil resources (MMbbls) 1C 2C 3C
31 December 2018 36.8 73.7 121.3
Technical revisions 29.7 78.3 224.5
31 December 2019 66.5 152 345.8

Following completion of the acquisition in 2019, Genel estimated gross resources at Sarta to be c.500 MMbbls. This potential has now been validated through an external audit conducted by ERCE, who has estimated a mid-case total recoverable oil resource of 593 MMbbls, of which 264 MMbbls is classified as 2C resource. Production performance in 2020, and the results of the upcoming three well campaign in 2021, will set out a roadmap for the conversion of these resources into reserves.

The Bina Bawi oil development has been certified by ERCE as 17.1 MMbbls of 2C resources, 13.6 MMbbls of which are expected to be converted into 2P reserves should a commercial agreement be reached and FID be taken on the first phase of the oil project.

At Qara Dagh the QD-2 well will test the crestal portion of the prospect which, based on a rigorous re-mapping exercise, has a mean prospective resource estimated by Genel at c.400 MMbbls. Genel estimates that the downdip segment tested by the QD-1 well defines a 2C resource of 47 MMbbls.

(Source: Genel)

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Dana Gas announces Increased Reserves in Iraq

Dana Gas has announced that its share of the proved plus probable (2P) hydrocarbon reserves at Pearl Petroleum Company‘s Khor Mor (pictured) and Chemchemal fields in the Kurdistan Region of Iraq (KRI) have increased by 10 percent following the recent certification of reserves by Gaffney Cline Associates (‘GCA’).

2P Reserves Upgrade

The independently audited report, prepared by Gaffney Cline on behalf of Pearl Petroleum, showed that the total share for Dana Gas (35% shareholder in Pearl Petroleum), is equivalent to 1,087 million barrels of oil equivalent (MMboe), up from 990 MMboe when GCA first certified the fields in April 2016.

This confirms that the fields located in the KRI could be the biggest gas fields in the whole of Iraq. The reserves were boosted in part by the booking of oil reserves in the Khor Mor Field for the first time.

GCA’s most recent report confirmed that Dana Gas’s share of the Khor Mor and Chemchemal 2P reserves was 4.4 trillion cubic feet gas (2016: 5.3 Tcf), 136 million barrels of condensate (2016: 109 MMbbls), 13.3 million metric tonnes LPG and 18 MMbls of oil, the equivalent of 1,087 MMboe, as compared to 990 MMboe in April 2016.

Dr Patrick Allman-Ward, CEO of Dana Gas, said:

“The Gaffney Cline report has independently confirmed Dana Gas’ 2P reserves in our KRI assets at over 1 billion barrels of oil equivalent and our belief that the Khor Mor and Chemchemal Fields will most likely be the biggest gas fields, not just in the Kurdistan Region Iraq, but the whole of Iraq, making them world-class assets. 

“It is also satisfying to see that our auditors have formally booked oil reserves for the first time in Khor Mor. We believe that this is just the tip of the iceberg confirming our estimate of oil resource potential of over 7 billion barrels.

“These additional resource declarations will underpin our future development plans which will provide a reliable source of energy to meet the needs of electricity generation as well as industrial development in the region.”

Future Development

Earlier in the year, Pearl Petroleum signed a 20-year gas sale agreement with the Kurdistan Regional Government (‘KRG’) that will facilitate the production and sale of an additional 250 MMscf/d of gas.

Pearl Petroleum’s expansion plan will see output increase to 650 MMscf/day in 2022, and then to 900 MMscf/day by 2023 from the current 400 MMscf/day.

With the price of oil ranging between $60 to $70 per barrel, each of these two new gas production trains will generate between $175 to $200 million to the Company’s share of revenue and project’s cash flows per annum.

(Source: Dana Gas)

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Taq Taq Oil Reserves Update

Genel Energy has announced that McDaniel and Associates (‘McDaniel’) has completed the competent person’s report (‘CPR’) relating to the oil reserves at Taq Taq as at 31 December 2018.

Field performance in 2018, and notably the success of the TT-29w well drilled on the northern flank of the field, has led to an upwards technical revision of reserves, resulting in a 62% reserves replacement at the 1P level.

This revision does not take into account the recent positive results from the TT-32 well, which completed in 2019 and is currently adding over 3,000 bopd to field production.

Drilling in 2019 is targeting opportunities on the flanks of the field, with the TT-20z well nearing completion and three others then to follow. Should the wells match the performance of TT-29w and TT-32, Taq Taq could deliver a significant year-on-year production increase, with room for further growth in 2020.

The Company expects to announce CPR reports for other assets in the portfolio prior to the announcement of full-year results on 20 March 2019.

(Source: Genel Energy)

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DNO Increases Oil Reserves, Shares Rise

Shares in DNO ASA, the Norwegian oil and gas operator, were trading up five percent on Monday afternoon following the company’s announcemnt that it has replaced 2018 production through additions to reserves, marking the second consecutive year in which the Company’s replacement of proven reserves reached or exceeded 100 percent of production.

“DNO’s stellar record of reserves replacement through the drill bit is a result of stepped up spending on our portfolio of quality assets coupled with rapid-fire execution,” said Bijan Mossavar-Rahmani, DNO’s Executive Chairman. “And the barrels we continue to add are among the lowest cost in the industry, anywhere,” he expounded.

Yearend 2018 Company Working Interest (CWI) proven (1P) reserves stood at 240 million barrels of oil (MMbbls), unchanged from yearend 2017 after adjusting for production and technical revisions. On a CWI proven and probable (2P) reserves basis, DNO replaced 98 percent of its 2018 production, exiting the year with CWI 2P reserves of 376 MMbbls (384 MMbbls in 2017).

At 2018 production rates, DNO’s 1P reserves life is 8.2 years and its 2P reserves life is 12.9 years.

Significantly, the Company’s 1P reserves replacement ratio (RRR) has reached or exceeded 100 percent in eight of the past ten years.

On a gross basis, at the Tawke license in the Kurdistan region of Iraq containing the Tawke and Peshkabir fields, yearend 2018 1P reserves stood at 348 MMbbls, unchanged from 2017 after adjusting for production of 41 MMbbls and upward technical revisions of 41 MMbbls. Tawke license 2P reserves stood at 502 MMbbls (513 MMbbls in 2017) and proven, probable and possible (3P) reserves at 697 MMbbls (880 MMbbls in 2017).

Broken down by field, Tawke field gross 1P reserves stood at 294 MMbbls (335 MMbbls in 2017), 2P reserves at 376 MMbbls (438 MMbbls in 2017) and 3P reserves at 477 MMbbls (588 MMbbls in 2017). Peshkabir field gross 1P reserves stood 54 MMbbls (13 MMbbls in 2017), 2P reserves at 126 MMbbls (75 MMbbls in 2017) and 3P reserves at 220 MMbbls (292 MMbbls in 2017).

International petroleum consultants DeGolyer and MacNaughton carried out the annual independent assessment of the Tawke license. The Company internally assessed the remaining licenses in its portfolio.

The 2018 Annual Statement of Reserves and Resources, prepared and published in accordance with Oslo Stock Exchange listing and disclosure requirements (Circular No. 1/2013), is attached and is also available on the Company’s website at www.dno.no.

(Sources: DNO, Yahoo!)