Dubai oil explorer offers Lamu Basin stake for Sh2.3bn

Money Markets

An offshore oil platform. Milio E&P is looking to sell part of its oil and gas exploration block off the coast of Lamu for finance survey and drilling works before May 2016. PHOTO | FILE 

By GEOFFREY IRUNGU, girungu@ke.nationmedia.com

In Summary

• The firm has appointed UK-based Envoi, a consultancy on upstream oil and gas industry, to advise on the sourcing of the partnership for the Kenyan subsidiary, Milio E&P Kenya.
• Milio E&P owns 60 per cent of Block L6, while FAR and Pancontinental—both of which are involved in exploration—hold 24 and 16 per cent, respectively. The two companies with minority holdings in the block are listed on the Australian Stock Exchange.
• Milio has up to May next year to drill a well in L6, giving it time to raise cash and do the actual work in the block.

A Dubai-based company exploring for oil and gas in the Lamu Basin is seeking new partners to take up stakes in blocks estimated to contain over two billion barrels of oil.

Milio Exploration and Production (Milio E&P) wants new partners to finance the surveying and drilling in Block L20 and L6 at a price of more than Sh2.3 billion.

The firm has appointed UK-based Envoi, a consultancy on upstream oil and gas industry, to advise on the sourcing of the partnership for the Kenyan subsidiary, Milio E&P Kenya.

“Milio is offering a negotiable interest in the combined acreage to a strategic partner willing to fund the new seismic (exploration) and (drilling of) a well in Block L6 where the potentially very large lead is a primary target,” said Envoi in its advisory to prospective investors.

Milio E&P owns 60 per cent of Block L6, while FAR and Pancontinental—both of which are involved in exploration—hold 24 and 16 per cent, respectively. The two companies with minority holdings in the block are listed on the Australian Stock Exchange.

READ: Australia oil firm sells stake in Lamu block

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“New regional evaluation confirms large reserves potential in the onshore extension of the proven hydrocarbon play fairway with both oil and gas sources in Block L6…resource potential in Block L6 alone is 2.3 billion barrels,” said the prospectus prepared by Envoi for Milio E&P Kenya.

Milio’s Kenya subsidiary is expecting the new partners to contribute towards settling their past costs of exploration—which are not disclosed in the prospectus.

The document says details of the partnership can be obtained by interested investors on signing a non-disclosure (or confidentiality) agreement with Milio E&P Kenya.

The new partner(s) is also expected to fund a seismic (or geological) survey estimated to cost up to Sh1 billion ($11 million), plus drilling a well in the onshore part of L6, estimated to cost between Sh1.1 billion and Sh1.3 billion ($12-14 million), before May 2016.

Exploration

This means Milio Kenya is seeking a partner to inject up to Sh2.3 billion, besides meeting some unspecified costs of past exploration.

This is not the first equity sale bid by firms drilling in Kenya amidst tight finance markets following slide in oil prices.

Only last week, another exploration firm, Swala Energy, said it had received bids to buy part of its stake in Block 12B near Kisumu.