Dana is the operator of three PSCs offshore Mauritania (Blocks 1, 7 and 8) with a combined area of approximately 34,500 sq. km. These are north of Woodside’s Chinguetti, Banda and Tiof discoveries.
While no official news has come from Woodside since January when it said it had earned the option, a spokesman this morning confirmed to EnergyReview.net it had agreed to take up its stake in Block 7. It has not yet announced the news to the Australian Stock Exchange.
At that time, Woodside said it had earned the 10% option after bringing the Pelican gas discovery drilling program in on time and under budget.
“We have exercised the option but have not yet received the transfer of interest document. That is just a formality” the spokesman said.
The spokesman agreed the Wintershall deal was somewhat of a surprise given British Gas, which took a stake in the Woodside-operated blocks last year and which has said publicly it was looking at an onshore LNG facility using Mauritanian gas, has been the most widely tipped candidate.
“You would have thought the obvious people would have clubbed together as much acreage as possible to protect their interests.”
Following Woodside’s farmin to Block 7, Hardman Resources would revert from 18% to 16.2% and ROC Oil would retain a 4.95% interest. Dana holds 68.5%.
In Block 8, Dana remains the operator and holds a 41.5% stake. Wintershall will hold 38.5%, Hardman Resources (18%) and Roc Oil (2%).
Roc Oil’s John Doran said this morning he would expect ROC to exercise its Block 8 option to move from two percent to five percent, but not at this time. He said it was effectively a no cost option.
Under the terms of the agreement with Wintershall, the German firm will pay for all of Dana’s cost for the rest of the current exploration period; inclusive of the cost of a major 3D seismic feasibility study on the block.
Dana is valued at less than A$500 million.
According to Dana CEO Tom Cross, “Dana is pleased to be accelerating the exploration of Block 8 and to welcomes Wintershall as a new co-venturer. The geology and therefore the exploration challenges in Block 8 are quite different to [our] Blocks 1 and 7 to the south [and] we have therefore decided to take a more measured investment approach in Block 8 and bring in a partner whose experience in analogous areas of North Africa will benefit the joint venture.”
This sentiment was shared by Dana technical director Andy Bostock.
“The deal will mean Dana will give up some of the potential upside from the area but will be spared the expense of acquiring three-dimensional seismic survey data for a block covering 1,800 sq km,” said Bostock.
“[And] while Dana had identified some large prospects using two-dimensional seismic surveys, the geology of the block would make exploring it harder and riskier than [our] other exploration interests in Mauritania,” he added.
Pelican-1, which was Dana’s first Mauritanian well, has estimated gas-in-place of 1 trillion cubic feet with recoverable reserves pegged at between 600-800 billion cubic feet.
In a statement Dana’s Cross said, “We are delighted to welcome Woodside to the Block 7 group. Woodside’s success in its own operated blocks offshore Mauritania will provide valuable input to the future exploration of Block 7 and the appraisal of the Pelican discovery.”
In associated news, Hardman managing director Ted Ellyard said he expected to have the ANZ Bank-arranged project financing completed at any moment for its share of the Chinguetti development.
"Documentation is being finalised and is in the hands of the lawyers," he said.
