oil barrel conference writePerhaps the one similarity between Admiral Bay and Mart Resources - beyond their shared listing in Toronto - is that neither company is interesting in wildcatting, preferring instead to develop known reserves. There the similarities end.
Mart operates in Nigeria, where it has signed up to four marginal oil developments - Umusadage, Qua Ibo, Eremor and Ke - in partnership with local companies as part of the Nigerian government’s drive to build an indigenous oil and gas industry and develop previously neglected discoveries. (This initiative is backed by improved fiscal terms for these fields, including a sliding royalty scale and a substantial reduction in petroleum profits tax.)
The local companies paid US$150,000 - an absolute steal, according to Mart’s president David Parker - for fields left behind as the hunt for elephants took Big Oil away from the inland areas of the Niger Delta to the deep offshore. But as Parker stressed to delegates, some of these fields are anything but marginal. What a Shell or Chevron deems immaterial can be a company-maker for the likes of Mart, which is seeking to list on AIM in May. The upper reserve number on the onshore Umusadage field, for example, is almost 50 million boe.
Mart is keen to get after these reserves. Frustrated by the rig shortage in West Africa, the company has bought one converted rig, which can drill to 8,500 ft, and is in the process of buying a newbuild from Alaska capable of drilling deeper. “We don’t want to be in the rig business but we’d been trying to contract a rig for six months without success,” said Parker. “This way we can hire it out to third parties and use it to acquire strategic leverage to negotiate more deals.”
Those deals include plans to partner those local companies that own undeveloped fields around the Umusadage field in order to build economies of scale into the development model. Those talks are ongoing and Parker admitted there is competition for those projects.
But Mart doesn’t intend to hold back on its fast-track development plans for Umusadage while those talks are concluded. It plans to use modular, skid-mounted processing facilities, each with a capacity to handle 8,000 bpd, to develop the field, which was discovered in 1974 by Elf. Mart plans to re-enter one old well, N2, which flowed at 2,600 bpd, and drill two new wells. It expects the wells to flow around 3,000 bpd with first production due early in 2007.
It is also keen to get after the Qua Ibo field, part of which actually lies underneath Exxon’s export terminal. Qua Ibo was discovered by Shell in 1960. More than four decades on and Mart plans to develop the field by drilling two new wells this year with first oil due in the first half of 2007. In all, it expects to be producing between 10,000 and 15,000 barrels per day from Umusadage and Qua Ibo next year, quite a step change for the Canadian oil junior.