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New companies are backbone of Nigeria's oil sector
News Date: 16th September 2013
The Nigerian Government is planning to increase its share of profits from oil production from the current 61 per cent to 73 per cent. The National Assembly is currently debating the Petroleum Industry Bill that will facilitate the change.
During a recent hearing at the National Assembly in Abuja, Petroleum Resources Minister Diezani Alison-Madueke explained that the change was as a result of the rise in the price of the barrel of oil, which was $20 in 1993 when the initial arrangement was introduced.
"The PIB establishes a flexible fiscal regime that will increase government take and yet encourage investment," Alison-Madueke told legislators at the Abuja meeting. She added that the new law would take at least three years after it was passed by parliament before it came into operation.
While oil majors have been holding back in approving new projects because of the legislation, the new kids on the block, such as Heritage Oil, have been expanding their operations in Nigeria. These new companies are the ones that are ready to operate in Nigeria in spite of the country's changing oil environment and are breathing new life into old oil fields.
Heritage, for instance, is operating through its Nigerian subsidiary, Shoreline, which is a joint partnership with local investors.
The offshore oil producer's investment in Nigeria is increasingly looking like a commercial success. It has seen its operations blossom since its acquisition of an interest in OML 30. Indeed, the company's fortunes have changed from a loss of $50 million for the six-month period ended 30 June 2012 to after tax profit of $57.2 million in the six-month period ended 30 June 2013.
Heritage announced that OML 30 achieved record gross production of 44,000 barrels a day (b/d) last month, with a first half average gross production for the licence of 15,327 b/d. This is in line with projected production of 45,000 b/d for the second half of 2013, nearly three times that of the first half of the year, bringing the expected average for 2013 to 30,000 b/d.
Heritage said that this increase in production from OML 30 for the rest of this year would be made possible by the installation of new equipment, working over existing wells and starting production from the Uzere West field, which has been shut-in for nearly two years.
With these technical improvements, Heritage expects average gross production for 2014 to be in the range of 60,000 to 65,000 b/d.
These improvements in production in Nigeria, as well as in Russia, helped boost Heritage's revenues in the first half of the year by $238 million.
"We have started the second half of the year remaining resolutely focused on our existing operations in Nigeria to ensure we extract maximum value from our asset," said Tony Buckingham, Heritage's CEO. "Considerable cash flow can be generated from our OML 30 interests to fund our exploration portfolio in the short term and longer term and provide surplus funds for a sustainable dividend stream to our investors.
"Activity will be focused on delivering production growth over the next twelve months whilst also providing a step up in exploration drilling. The company is positioned to offer a balanced portfolio with upside from both production and exploration," Buckingham added.
"Heritage's commitment to Nigeria is moving apace, as it continues to expand production and increase revenue, which will be good news for the Nigerian government," said one oil expert in London.
"The Nigerian Government needs the revenue to start its long-cherished plan of finally overseeing a truly diversified economy. For Heritage, this is a win-win situation and this has enhanced the company's sound business sense as far as its Nigerian investment is concerned", the CEO noted.
New companies are backbone of Nigeria's oil sector
News Date: 16th September 2013
The Nigerian Government is planning to increase its share of profits from oil production from the current 61 per cent to 73 per cent. The National Assembly is currently debating the Petroleum Industry Bill that will facilitate the change.
During a recent hearing at the National Assembly in Abuja, Petroleum Resources Minister Diezani Alison-Madueke explained that the change was as a result of the rise in the price of the barrel of oil, which was $20 in 1993 when the initial arrangement was introduced.
"The PIB establishes a flexible fiscal regime that will increase government take and yet encourage investment," Alison-Madueke told legislators at the Abuja meeting. She added that the new law would take at least three years after it was passed by parliament before it came into operation.
While oil majors have been holding back in approving new projects because of the legislation, the new kids on the block, such as Heritage Oil, have been expanding their operations in Nigeria. These new companies are the ones that are ready to operate in Nigeria in spite of the country's changing oil environment and are breathing new life into old oil fields.
Heritage, for instance, is operating through its Nigerian subsidiary, Shoreline, which is a joint partnership with local investors.
The offshore oil producer's investment in Nigeria is increasingly looking like a commercial success. It has seen its operations blossom since its acquisition of an interest in OML 30. Indeed, the company's fortunes have changed from a loss of $50 million for the six-month period ended 30 June 2012 to after tax profit of $57.2 million in the six-month period ended 30 June 2013.
Heritage announced that OML 30 achieved record gross production of 44,000 barrels a day (b/d) last month, with a first half average gross production for the licence of 15,327 b/d. This is in line with projected production of 45,000 b/d for the second half of 2013, nearly three times that of the first half of the year, bringing the expected average for 2013 to 30,000 b/d.
Heritage said that this increase in production from OML 30 for the rest of this year would be made possible by the installation of new equipment, working over existing wells and starting production from the Uzere West field, which has been shut-in for nearly two years.
With these technical improvements, Heritage expects average gross production for 2014 to be in the range of 60,000 to 65,000 b/d.
These improvements in production in Nigeria, as well as in Russia, helped boost Heritage's revenues in the first half of the year by $238 million.
"We have started the second half of the year remaining resolutely focused on our existing operations in Nigeria to ensure we extract maximum value from our asset," said Tony Buckingham, Heritage's CEO. "Considerable cash flow can be generated from our OML 30 interests to fund our exploration portfolio in the short term and longer term and provide surplus funds for a sustainable dividend stream to our investors.
"Activity will be focused on delivering production growth over the next twelve months whilst also providing a step up in exploration drilling. The company is positioned to offer a balanced portfolio with upside from both production and exploration," Buckingham added.
"Heritage's commitment to Nigeria is moving apace, as it continues to expand production and increase revenue, which will be good news for the Nigerian government," said one oil expert in London.
"The Nigerian Government needs the revenue to start its long-cherished plan of finally overseeing a truly diversified economy. For Heritage, this is a win-win situation and this has enhanced the company's sound business sense as far as its Nigerian investment is concerned", the CEO noted.
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