Pura Vida still on the hunt for acquisition opportunities

1st February 2013 By: Esmarie Iannucci - Creamer Media Senior Deputy Editor: Australasia

PERTH (miningweekly.com) - Despite having just pulled off a coup in Gabon, by acquiring an 80% interest in the Nkembe tenement, oil explorer Pura Vida Energy said that it was still on the hunt for more opportunities.

Speaking to Mining Weekly Online, MD Damon Neaves said that the company was looking at acquisition opportunities in East, West and North Africa.

“Our strategy is about building a diversified portfolio. Picking up the second block in Gabon was a big step for us, and we see that as highly complimentary to our Moroccan acreage,” Neaves said.

The Nkembe block covers some 1 210 km2 offshore Gabon, in water depths of around 20 km, in the oil prone Gabon basin. The block is in close proximity to several producing oil fields, including several operated by major Total.

Neaves said that Pura Vida’s strategy was to target a big equity stake in a prospective area, allowing the company to create value in the pre-drill phase, as it did with its Moroccan acreage, while also giving it the flexibility to trade an equity stake during the drilling phase, allowing a company with a larger balance sheet to carry the risks.

“An initial large stake gives us the flexibility on funding options, but also means that we end up with a material stake at the end. A lot of juniors faced with the cost and risks of drilling tend to end up with a very small equity position, or they will take small positions and spread the risk that way. This is not our strategy,” he added.

In Morocco, Pura Vida had initially acquired a 75% stake in the Mazagan permit, which has a prospective resource of some 5.3-billion barrels of oil.

At the start of this year, Pura Vida signed a $215-million farm-out agreement with oil major Plains Exploration and Production, who acquired a 52% interest in the Mazagan permit, with the major committing to fund and drill two wells on the tenement.

The two exploration wells would allow the joint venture partners to test independent play types, increasing the chances of exploration success.

“Our strategy certainly paid off in Morocco. The biggest question on everyone’s mind was would we be able to secure funding for a deep-water drilling programme, and many people saw it as ambitious to go in at a 75% equity stake. But I think with the farm-out agreement, we have definitely answered that question,” Neaves said.

Plains’ first order of business is to target the Toubkal prospect, which has a mean resource potential of up to 1.5-billion barrels. Neaves noted that this prospect was likely to be drilled in 2014, coinciding with forecasted rig availability and the drilling programmes being planned by operators in the neighbouring blocks.

In Gabon, Pura Vida will undertake a three-dimentional azimuth survey, which was likely to cost some A$10-million. A seismic survey would be conducted in the third quarter of this year.