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Oxy Welcomes OOCEP’s 45 per cent Interest in Oman Block 9

Source: Oman Observer 2/11/2017, Location: Middle East

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US-based international oil and gas producer Occidental Petroleum Corporation (Oxy) says it is optimistic about growth prospects across its substantial operations in the Sultanate, most notably in Block 9 where state-owned Oman Oil Company Exploration & Production (OOCEP) recently acquired a 45 per cent participating interest. Block 9, also known as the Suneinah block in north Oman, is a key source of hydrocarbons where output from the Safah and Wadi Latham fields averaged around 100,000 barrels of oil equivalent per day (boepd) in 2015.

Under a revised Exploration & Production Sharing Agreement (EPSA) signed in Muscat last month, OOCEP — the upstream energy arm of wholly government owned investment vehicle Oman Oil Company — acquired a 45 per cent participating interest in the Oxy-operated block. Oman’s Oil & Gas Minister Dr Mohammed bin Hamad al Rumhy, inked the agreement on behalf of the government, while OOCEP was represented by Eng Isam al Zadjaly, CEO of Oman Oil Company. Mitsui E&P is also a partner in the block.

In remarks to analysts over the weekend, Ken Dillon, President of International Operations at Occidental Petroleum Corporation, described the new Block 9 contract as promising. “That’s a 15-year contract where we see substantial growth opportunities, both in oil and gas and in exploration. We think there are other opportunities in Oman that are a good fit long-term for us. So overall very positive,” he said.

Over the 30 years of its operations in the Sultanate, Oxy Oman has emerged as the largest independent oil producer with a black oil contribution averaging 233,000 barrels per day in 2015. More than half this volume came from Oxy’s Mukhaizna in Block 53, home to one of the world’s largest steamflood projects. The company also operates Blocks 27 and 62 in north Oman.

Earlier, in the same conference call to discuss the group’s 2016 Q4 earnings, top Oxy officials also underlined the growing importance of the Houston-based international company’s Oman operations.

Vicki Hollub, President and CEO — Occidental Petroleum Corporation, said: “We have lots of opportunities (…) especially in Oman, where we just recently obtained some seismic over Block 9, so we are doing infill drilling that’s very successful. We’ve got Block 62 gas development. We also see opportunities above and below our current steam flood interval in Mukhaizna, and so we have a lot of potential there…”

In particular, rising output from Oxy’s Block 62 has continued to buoy the group’s worldwide operational performance. Two new gas fields — Fushaigah and Maradi Huraymah — have been brought online in Block 62, also known as Habiba Block. A gas plant was also successfully brought on stream at Maradi Huraymah.

While Oxy’s Permian Basin in the United States is the group’s main growth engine, its international operations, most notably in Oman, will contribute to its free cash flow swing in 2017. The Block 9 contract re-signed last month will account for two-thirds of an estimated $400 million in additional free cash flow coming from the Group’s international operations, Occidental Petroleum Corporation’s Vicki Hollub noted.

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Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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