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As a result, the Group’s strategy is to continue to maintain a balanced portfolio of assets within the core MENA region
that aims at jurisdictional diversity by maintaining a mix of both development assets that generate stable cash flows, and
exploration and appraisal assets that the Directors believe provide future growth potential. As part of its asset selection
process, the Group plans to continue its focus on assets that would benefit from its knowledge of the geological and
subsurface conditions in the core MENA region, as well as its understanding of how to operate effectively in the region
to deliver efficient and cost effective operations.
To further this strategy, the Group has an active exploration and appraisal drilling programme with 91 wells planned for
the period from 1 January 2014 through 31 December 2016, targeting 2P working interest reserves of 400 mmboe and
average daily working interest production of 75,000 boepd (Group estimates). See “—
Planned capital expenditure and
near-term exploration and appraisal programmes
.” This programme includes Block 9 in Iraq, which is close to existing
infrastructure and is estimated to have 700.8 mmboe of recoverable oil resources and 609.5 Bscf (101.6 mmboe) of
recoverable gas resources, according to the estimates of the Group’s 2C contingent resources on a working interest basis
as at 31 May 2014 as reported by GCA. The Group commenced drilling the first exploration well in Block 9 in March
2014. The Group is engaged in active negotiations to farm out a portion of its working interest share in the Block 9
licence and expects to conclude an arrangement by the end of 2014. If such a farm out arrangement is entered into, the
proportion of the Block 9 contingent resources in the CPR that are attributable to the Group will be reduced accordingly.
Under the terms of the Block 9 licence, the other parties to the licence will have a right of first refusal to acquire the
working interest that is subject to any proposed farm out. See “
Risk factors—Risks relating to the Group—The Group
may be unsuccessful in realising its reserve and production growth targets
” and “
Risk Factors—Risks relating to the
Group—The economic valuations contained in the CPR may not provide an accurate estimate of the value of the Group
or its assets
.” In order to enable it to focus on the core MENA region, the Group is actively seeking to sell or monetise
the assets in or otherwise to exit all jurisdictions save for Egypt, Iraq, Yemen and Oman.
Leverage local knowledge and expertise to enhance operational effectiveness and reduce operational risk
The Group believes opportunities are being presented throughout the greater MENA region as a result of liberalisation
by national oil companies and the maturation of existing fields. With its in-depth understanding of the oil and gas
industry in the countries in which it operates, the Group will seek to establish a long-term operational presence in other
key countries in the greater MENA region. By becoming and remaining a valued partner for both local governments and
other oil and gas companies in the greater MENA region, the Group will seek to take advantage of these opportunities by
deepening and extending its contacts and relationships with governments and oil and gas industry participants throughout
the greater MENA region, both in countries where it currently has operations as well as in new jurisdictions in which it
may seek to invest. The Directors believe that this will provide the Group with a competitive advantage in gaining access
to new opportunities in the region, as it has demonstrated with its licence awards in Iraq, as well as contributing to more
efficient operational processes, cost management, and resolution of any delays or problems. The Group will also
continue to focus on maintaining good relationships with local communities and aims to maintain good community
relations in the communities which host its operations.
The Group believes its technical and operational expertise gained through its experience in managing mature oil and gas
fields, as demonstrated by its successes in its Area A and BEA licences in Egypt will aid in reducing operational risk
associated with the Group’s developed and producing assets. The Directors believe that the core MENA region provides
significant opportunities for experienced operators such as the Group to create and extract greater value from developed
and producing assets, including mature oil and gas assets. These assets usually require more management attention and a
higher level of technical expertise with production enhancement than many less experienced operators can provide.
The Group’s health, safety, sustainability and environmental record illustrates a strong focus on adopting international
best practices in respect of Health, Safety, Sustainability & Environment (“
HSSE
”) systems and controls, which is led
by the Group’s senior management. The Directors believe that this is essential to long-term shareholder value given the
inherent risks of oil and gas exploration, appraisal and development operations. The Directors believe that this approach
to HSSE assists the Group in creating and maintaining its relationships with governments and other oil and gas
companies. These stakeholder relationships, including with local governments, members of the Civil Service, and others,
allow the Group to operate efficiently from a cost perspective, by hiring as many local employees as possible and thereby
also mitigating risks of sabotage, interference or local resistance to the Group’s activities. As part of the Group’s
commitment to international HSSE standards, both as an operator and non-operator of its assets, the Group focuses on
providing training to local employees and enforcing standards which aim to proactively reduce LTIs, and identify and
remedy any weaknesses.
Maintain robust standards of corporate governance with entrepreneurial spirit while operating in a safe manner
The Directors believe robust corporate governance practices are a key element of its strategy and necessary to create
value for shareholders. The Board has established audit and risk, remuneration and nomination committees and has had
such committees in place since 2012. During 2013, the audit and risk, remuneration and nomination committees met on
