Q2-2016: TULLOW CONFERENCE CALLBelow are comments from Tullow - Q2-2016 investor presentation. Tullow's comments seem to be very positive regarding the Guyana/Suriname Basin and the shelf in particular...
Comments from Tullow below:
* We've got exciting exploration program launched in Guyana-Suriname and I'll talk a bit more about that. That's been given a boost on the back of the major discovery by Exxon last year in the Liza-1 discovery and I'll explain how that's relevant.
* So let's go straight to Guyana-Suriname, our offshore position there; an excellent strategic position in a new oil province. We were a first mover/early mover in this basin. The Liza-1 oil discovery, as I said, has significantly de-risked the basin and Tullow's regional acreage.
* Now, you can see on the map on the left - center left a little, you see the Liza-1 and 2 well results flagged in green. We had oil shows in green at Jaguar. There are oil shows in Aitkanti and there's an oil field onshore in Tambaredjo. What this is demonstrating is that this oil charge has made its way from the basin center through the shelf edge, across the shelf and up to the beach at the edge of the basin. So we're in a very good position here. If you think of our acreage position it's, actually, a bit like a baseball catcher's mitt. We've got ourselves fully wrapped around the kitchen catching the oil that's coming up through the reservoir fairways into our acreage.
* I just want to highlight one of prospects which continues to rise to the top of the list, is the Araku prospect. You see that in the cross section on the right hand side. Araku is a major prospect in Suriname and Block 54. It's a 500-million barrel premium in a four-way closure with good seismic amplitude support with seismic amplitudes fitting to structure. The well costs are low. The Araku estimated well cost of around $14 million, one four, net to Tullow. We're the operator there with 30%. We've got a lot of follow-up potential there; multiple, high-quality prospects identified for follow-up in 2018 plus. These really are game-changing low cost prospects.
* Just zooming in a bit on the Guyana side of that acreage position, on the map on the left you see our two main licenses, Kanuku and Orinduik. An outboard of that you see the Liza discovery. You see our orange prospects, I've flagged one there, Kaieteur, for instance. On the cross section on the right, you see how Kaieteur, our prospect, sits up-dip of Liza-1 and it's in the same stratigraphic interval. The thesis here and it's a pretty compelling one, is that the oil that is charged at Liza, that system, that charge, also has a good chance of being present in the reservoir's up-dip in the Kaieteur prospect. The advantage of the Kaieteur prospect is that it's in shallow water. It's only 100 meters of water, so we're looking at very low costs in our environment compared to the ultra-deep water setting further offshore. So, Kaieteur for us, our estimated well costs is of the order of $15 million net to Tullow. Again, a non-op - this is a non-operator position at 30%. So the key activity for 2017, later this year, is to get after the 3D seismic survey acquisition across our acreage position to firm up drilling candidates for 2018, 2019 and so on. Lots of prospects pairing up with the outboard positions, so this isn't just a single shot; this is a play fairway.
* On the regional exploration question, why are we not in Liza, why are we not in SNE. We're focused very much on low cost oil plays, so we were certainly aware of the oil potential in Liza in the ultra-deep water. But as you might remember two or three years ago, we made a very clear strategic move away from complex drilling to low cost wells in shallower water. What we've been able to do is target the Liza play in 100 meters of water and thereby offer Tullow investors access to the Liza play in a shallow water setting. So it was a very conscious choice to take the shelf, rather than the ultra-deep water in Guyana.
* On M&A versus organic exploration your numbers are quite right, quite valid observations [buy vs drill]. Versus M&A, that's a big question always in the industry. But the advantage of finding your own oil means that when you make a discovery you've got your own beginning of life cycle, young fresh light oil field which you can plan and monetize through its life cycle. Whereas acquiring someone else's oil you might inevitably be locked into programs that you would rather not have locked into in detail and you might be much closer to abandonment. So we prefer to find our own oil if we can.