Resource World Magazine

the oil patch report Joe l C hur y Emperor Oil has high hopes in Sudan K "It was very quickly settled," says 11 (optional), with Sudapet carrying the eeping tabs on your portfolio requires a whole new level of Andrew McCarthy, President and CEO of other 50% working interest. Next on deck research when it includes com- Emperor Oil Ltd. [EM-TSXV], which is for the partnership will be the drilling and panies operating in countries unsafe for the first Canadian petroleum company to completion of a new developmental well, travel. Instead of only reading up on drilling attempt to operate in Sudan since 2003. as well as the completion of three discovresults, often, you can find yourself becom- "In many ways, I think it's indicative of ery wells that are already located in the ing deeply ensconced in the geopolitical a lot of changes that we're seeing in the three newly discovered fields on Block 7 which have plenty of historical data, scene of the country you've invested in. So Middle East and throughout Africa." The version of Sudan that Emperor will but will need work in order to bring the when it was announced in late September assets up to Canadian NI 51-101 that a new Canadian company had standards. signed a deal with Sudapet, the Once the wells are producing, iniSudanese national oil company, "Canadians have a wonderful reputation many investors scrambled to learn around the world, for working fairly, engag- tial oil production will be trucked 60 km to the main pipeline system about Sudan's situation and how it's ing the countries that they're operating in, the that gets the oil to the Port. Phase changed since Talisman Energy education they provide, and the improvements II of the partnerships business plan Inc. [TLM-TSX, NYSE] left in 2003. includes a $60 million pipeline conTheir findings would unearth that they make in a country…" struction plan to eliminate the need that it has changed a great deal. for trucks, and to better secure the For starters, the country democratically decided to allow the southern half to be operating in looks and feels very dif- flow of production underground. As well, secede last year and become South Sudan. ferent than the one Talisman bowed out a further 15 wells will be on the agenda This led to an adjustment period that saw of nearly 10 years ago. Heavy pressure between 2013-2019 at a cost of $40 milthe two countries jockey for position in on Talisman's public relations depart- lion for the entire package of drilling and terms of splitting oil revenues, with South ment during its Sudanese foray resulted in completions. The initial three-well compleSudan taking with it the bulk of the oil to management's hand being forced to parlay tion cost will be in the ballpark of $2.25 M the tune of 70%. Of the 460,000 barrels the controversial assets onto India's state- for all three, with the potential to get cash per day being produced, 350,000 are now owned oil company. With a far smaller flow from production as early as Q1 2013. There is plenty of production potential attributed solely to the South, which will stake, and redrawn map, Emperor should be exported peacefully through the shared face a far smaller amount of outcry than in place for Block 7, as in the southern usage of the main pipeline towards the Talisman did. Contrary to popular belief, portion of the Block (located on the South Talisman's departure was seen as a sad loss Sudan side), where there are over 100 Port of Sudan for shipment. Perhaps peacefully isn't an accurate by the Sudanese Government, which liked wells producing a total of 260,000 bbls/ day. Emperor Oil is exploring on the north description of the agreement over the pipe- dealing with Canadian expertise. "Canadians have a wonderful reputa- side of Block 7; that is, in Sudan itself. line, but things have definitely evened out more recently. Earlier this year, a dispute tion around the world, for working fairly, Transportation costs have been whittled over the amounts of oil, the royalties and the engaging the countries that they're oper- down to $9 per barrel, which doesn't presarrangement with the pipeline led to a six- ating in, the education they provide, and ent a major limiting factor. They say that time heals all wounds week skirmish that resulted in a temporary the improvements that they make in a cease of production. With production grind- country," says McCarthy. "This is who the and, in this case, the nine-year gap ing to a halt, so did revenues and it caused present Sudanese government has stated between Canadian-Sudanese oil development could be just what the doctor both sides to rethink how they are going they would like to work with." Through a memorandum of under- ordered. From here on out, those that to operate side by side. Not only was cash flow hindered, so was the country's own standing (MOU) announced in September, take the plunge on Emperor will be readenergy supply, which forced a reassessment Emperor is set to acquire 85% of privately- ing more headlines from northeast Africa of motives and repercussions of the two held State Petroleum Overseas Inc.'s 50% than usual, while keeping an eye on those nations that were temporarily out of synch. working interest in Block 7 and Block results from Block 7. n 54 www.resourceworld.com NOVEMBER 2012

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