• Thursday, March 28, 2024
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Petralon targets $100m financing to expand asset portfolio, grow reserves – Wanogho-Onunkete

Petralon targets $100m financing to expand asset portfolio, grow reserves – Wanogho-Onunkete

Joseph Wanogho-Onunkete, Petralon’s Chief Operating Officer (COO) has over 30 years’ cognate experience in the oil and gas industry working in Shell and Schlumberger. He has worked in multiple roles within the industry as a Wellsite Petroleum Engineer, Operations Engineer (Wells) and Operations Production Geologist, among others. He speaks to BusinessDay’s ISAAC ANYAOGU about the plans of Petralon, his current firm and a marginal field operator, to grow reserves and raise financing.

 

What is Petralon Energy’s strategy to stay competitive in an oil sector struggling to secure investments?

We have a five-year plan which kicked off this year, as we aim to increase production seven-fold and net reserves by 500%. Our focus currently is on significantly expanding our asset portfolio and so we are right in the middle of an investing on asset acquisitions and also on development expenditure where required to unlock the value in the acquired reserves.

To attain the 50% mark, our attention is on a few mid-sized transactions for 2019, which are at different stages in the pipeline. Our mid-term goal is to increase our net reserves position up to 30 mmbbls and also grow our production to a minimum of 15,000 barrels per day net, by the end of 2023.

We are well positioned to secure the investment required for our growth plan and are actually in the process of raising between $80 to 100million dollars, which will bring in new shareholders to the company.

Many marginal field operators have been unable to take their fields to development. From your experience with OML 54, why has it been so difficult?

 

There are different kinds of challenges marginal field operators encounter in the development process. Firstly, the marginal field arrangement was a program created and targeted at fields which were undeveloped by the IOC’s due to their assessment that the fields were not commercial at the point relative to other opportunities within their portfolio.

 

This means that the fields within the wider block were already considered as ‘development problem candidate’. This was mainly due to their relatively smaller size or reserve accumulation, which makes the justifying the investment required to unlock the value in the fields a major task.

 

There is a lack of infrastructure on the fields, for instance, most of the fields did not have an established evacuation route for the produced crude and have in addition to drilling wells and putting production facilities on the field location. The asset owners have had to put in place pipelines to take their production to market or evacuate through a third party location or terminal which requires barging the crude or trucking, which if not efficiently managed is a very tedious process.

Moreover, the dearth of adequate social and infrastructural amenities like good roads, secure waterways, and proximity to functional seaports, jetties, airports, etc, implies that these marginal field operators make budgetary provisions for some of these amenities rather than channeling their scarce means on the primary business of exploiting hydrocarbon from the plays. I am also aware that some of the forged partnerships were not properly fitted and so the partners inability to work towards the common objective has created delays in achieving the desired results.

Finally, and perhaps most impactful is the funding sources being deployed on the asset. The exploration and production industry is capital intensive and a huge capital outlay is required to achieve first oil.  Most of the marginal field operators have struggled to get the right funding mix for the assets and as a result are either over indebted at an early stage and cannot access more funding or lack the sophistication or organization to appeal to the right funding sources.

 

What is the best way operators can quickly take these fields to production?

I think it is more a question of the quality of the partnership and how the partner entities can work together towards achieving an objective. The best way to successfully yield production is to have the right people, great and complementary partnerships and the courage to take calculated risks.

Secondly, well-structured and complementary partnerships cannot be overemphasized; it is a key driver for any successful investment or operation in the oil and gas sector. This is why we positioned ourselves optimally for the right strategic partnerships – from our Board of Directors to the drivers of our operations, we are keen on leveraging the capabilities of individuals and organisations within and outside the oil and gas sector. For example, in 2017, we formed a partnership with Julius Berger Nigeria Plc. JB has the capacity to deliver construction and the pre-fabrication works, which we need in developing oil and gas assets, as well as dredging and tug-boating for assets located in swamp or shallow water terrains.

 

Considering Petralon Energy’s experience, what technical attributes and risks should investors look out for in oil assets in the Niger Delta?

 

Potential investors should look out for such technical attributes like the size of the hydrocarbon pool(s), operational terrain (land, swamp, shallow offshore, offshore), geophysical and geological setting, hydrocarbon types and their associated petrophysical and reservoir engineering (PVT) properties. Aquifer support and drive mechanism.

 

In the Niger delta, the prolific paralic reservoirs of the Agbada formation are essentially of clastic origin and the clay minerals of the smectite family that impede hydrocarbon productivity are less common.  Investors are much more wary of the reservoir fluids API gravity, aquifer support, and reservoir compartmentalization, reservoir connectivity, etc.  These parameters determine the type and number of wells to optimally exploit the hydrocarbons.

 

 

It is also common knowledge that, relatively, there are minimal subsurface risks in the Niger Delta and the challenges are mainly above surface on execution, such as with infrastructure, effectively managing the community and providing adequate security. We take these risks seriously and have proven active strategies that we deploy to ensure that they are well managed.

 

Besides awarding licenses, what else can regulatory bodies do to ensure that investors actually use the fields?

As facilitators, regulators must seek to understand the challenges and successes of players within the industry. By creating platforms for objective questioning and feedback, as well as information-sharing, it will be possible to gain insight into production challenges and relevant solutions.

It is also important to conduct regular checks and establish adequate monitoring mechanisms, with the intention to support rather than punish. Where possible, regulatory bodies can make recommendations for industry partnerships and pairings, based on in-depth analysis and observations, which can only be achieved if the right monitoring measures are established.