Devex Launchpad ii29 Oct 2018 21:12
Have now had the opportunity to read many of today’s posts, plus get my own thoughts together. For those interested I see this MOU as the launch pad to the development of both Tarabani, and indeed Block 12 as a whole. Rationale as follows:
This is an extremely broadly based MOU – to all intents and purposes an enabling agreement. Key sentence for me is “We are continuing to work with BHGE with the view to entering into definitive agreement(s) that will define our mutual cooperation, which may include the Company contributing to the venture via sharing of its oil and gas production.” Note the plural re “definitive agreements”.
BHGE did the cementing for the recent Tarabani drills They know the field issues as much as anyone out there, will understand the potential, and will have extended experience of working with FRR and Zaza.
I see the first “definitive agreement” as being for the Tarabani 2019 drill programme – probably including Niko. The funding arrangements for this programme will be covered in that RNS, and I would expect that pretty soon (I think we can assume this work will be very well advanced). Zaza wanted a “carry over” and if there is to be one it will be in that deal. Whatever – the wording allows for revenue sharing in exchange for work carried out, and we could also easily see asset based lending take place on the back of these “definitive agreement (s)” (or even as a part of them).
Critically this is not looking like a farm in. It is more like the operational partnership that Zaza expressed such a clear preference for. FRR remain as the licence owner but agrees to share revenues. The asset is therefore retained by FRR – and no-one should underestimate how important this is in future value creation. However I still se the end game as a JV – with or without FRR.
We need to note that Baker Hughes claims to be the only Full Stream provider out there. They provide these services to everyone from the minnows to the Super Majors
The MOU is broad ranging in two regards. FIRST regarding services – everything from drill management to digital analysis. They will have all of the resources that any major would use
– and of course all the resources that will be needed to update a CPR and to enable reserve declarations. SECOND regarding far more than just Tarabani. So Mirzaani is mentioned for the first time in a while. And in my read none of this excludes other players from getting involved – and as Zaza has said each field will have it’s own characteristics.
I think we can safely assume that a successful evolution of this MOU will explain why nothing more has been reported – anywhere – regarding the arbitration process since April this year.
So I for one am very happy with this. I think we can assume that other announcements will soon follow – but this MOU/enabling agreement was essential in providing the outline context to the way forward.
A very positive announcement in my view.
Sign In
Follow the stocks
