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A leading independent oil and gas exploration and development company focused on the core MENA region
The Group has a sizeable and diversified portfolio of oil and gas exploration, appraisal and development assets with a
significant focus on the core MENA region of Egypt, Iraq, Yemen and Oman. The Group’s asset portfolio currently
consists of 51 exploration and development licences in six countries, with the Group’s operations in the core MENA
region of Egypt, Iraq, Yemen and Oman accounting for 47 of these licences. The Group currently produces oil from 30
of its assets, located in Egypt, Oman and Yemen. According to the CPR as at 31 May 2014, the Group has 2P working
interest reserves of 165.7 mmboe, 2P net entitlement reserves of 37.0 mmboe, working interest 2C contingent resources
of 850.0 mmboe and working interest risked prospective resources of 26.4 mmboe. See “
Risk factors—Risks relating to
the jurisdictions in which the Group operates—The Group operates in jurisdictions that are subject to significant
political, economic, legal, regulatory and social uncertainties
.” Of these Group totals, assets in the core MENA region
of Egypt, Iraq, Yemen and Oman accounted for substantially all of the Group’s 2P net entitlement reserves, working
interest contingent resources and working interest risked prospective resources.
In order to focus management attention and Group financial resources on its exploration, appraisal and development
assets in the core MENA region, in 2013 the Group resolved to dispose of its operations in Russia and Ukraine,
classifying them as discontinued operations in the Group’s financial statements. In April 2014 the Group completed the
sale of its assets in Ukraine. The Group is engaged in active negotiations in respect of the sale of its assets in Russia and
expects to complete the sale during the third quarter of 2014. The Group has also ceased to pursue new projects in
Pakistan and Latvia, and plans to spend only the minimum capital expenditures required under its contracts in respect of
its asset in Mansuriya in Iraq. The Group is actively seeking to sell or monetise these assets or otherwise exit certain of
these jurisdictions altogether. The Directors believe that the geographic spread of the Group’s assets across various
countries within the core MENA region may assist in mitigating the impact on the Group of any single country-specific
political uncertainties which may arise.
Attractive and diversified reserves base with visible near term production growth potential
The Group has several assets at different stages of exploration and appraisal, which the Directors believe have strong
growth potential. In Iraq, the Group’s assets are close to existing infrastructure, and are governed by licences whose
remuneration rates are, the Group believes, the highest in Iraq. Siba and Mansuriya accounted for 59.7 mmboe and 72.9
mmboe, respectively, of the Group’s 2P working interest reserves as at 31 May 2014 and 9.6 mmboe and 15.7 mmboe,
respectively, of the Group’s 2P net entitlement reserves as at 31 May 2014. In addition, the Group was awarded an
exploration licence for Block 9 in Iraq, as part of the public auction of exploration licences conducted in May 2012 by
the Iraqi government. According to the CPR, the Group’s 2C contingent resources on a working interest basis as at 31
May 2014 in Block 9 are estimated to be 700.8 mmboe of recoverable oil resources and 609.5 Bscf (101.6 mmboe) of
recoverable gas resources. 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. See “
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
.” The Group has not yet commenced production in any of its assets in
Iraq, but expects first production from Siba in July 2015. The Group also has exploration and appraisal assets in Egypt
and expects to drill four exploration wells and three appraisal wells in Egypt in 2014. Egypt accounted for 27.9 mmboe,
or 16.8%, of the Group’s 2P working interest reserves as at 31 May 2014 and 10.3 mmboe, or 27.6%, of the Group’s 2P
net entitlement reserves as at 31 May 2014. The Directors believe that the successful development of its assets will
contribute to significant future growth in production and operational cash flows.
Strong relationships with national oil and gas companies, government bodies and other supportive stakeholders in the
MENA region
Over the past three decades of working in the core MENA region, the Group’s management team has built strong
relationships with national oil and gas companies and key decision-makers and officials in the oil and gas industries in
various countries in the region. These relationships include EGPC in Egypt, the Iraqi Oil Ministry, the Petroleum
Exploration and Production Authority (“
PEPA
”) in Yemen, and the National Oil Corporation in Libya. In the context of
these relationships, the Group provides valuable technical expertise, advice and assistance to the national oil and gas
companies and local governments on oil and gas projects that are important to these countries and to local economic
development. For example, in September 2007 the Group signed an MoC with the Iraqi Ministry of Oil to provide a
study of the Siba gas field and train a number of personnel. This MoC allowed the Group to provide technical support
and training while also giving the Group an opportunity to better understand the technical challenges of operating in Iraq.
The study the Group provided was used for the competitive bidding process and was helpful in the Group winning the
bid for Siba. More recently, in October 2010 the Group entered into a Memorandum of Understanding (MoU) with the
Yemen Ministry of Oil and Minerals to undertake a study of the potential development of natural gas reserves in Yemen
and the optimisation of the country’s natural gas resources for the benefit of its people and develop a long-term Yemen
