RAK Petroleum has gained full ownership of two oil and gas exploration sites in Oman after a British partner firm backed out of the venture, the company said on Sunday. RAK will raise its stake in the two onshore exploration blocks near the UAE border, which are thought to contain natural gas, from 50 per cent. Indago Petroleum, the partner firm, will pay RAK $3.5 million (Dh12.8m) to prematurely abandon the joint exploration agreement.
The move follows RAK's announcement last week that it would increase its stake in an existing offshore field in the Gulf by purchasing a subsidiary of Canada's Heritage Oil for $28 million. "The acquisition of these two companies and the acquisition of Eagle Energy (Oman) Limited holding a 10 per cent share of Block 8, which RAK Petroleum announced last week, highlight the intention to actively and aggressively expand our exploration and production assets in the region," said Abdulaziz al Ghurair, the chairman of the company's board of directors. "RAK Petroleum is well positioned with significant cash reserves and is on the lookout for suitable opportunities to add to our portfolio."
Indago opted to end its participation in the two onshore exploration blocks after weathering two costly drilling mishaps and the onset of the financial crisis. Last April, the two companies said they had experienced a "blowout" - a sudden influx of gas and liquids - into a $50 million drilling project on the Omani side of Jebel Hafeet, near Al Ain, and had abandoned the well. In July, executives announced they had abandoned a second well, located in mountainous terrain deeper within the country, after experiencing geological instability several hundred metres underground.
The setbacks prompted Indago's chairman, Tim Eggar, to tell shareholders in September that the company's board was considering "alternative strategic options", including bringing in additional investors. But the onset of the financial crisis left the company with few options other than to leave the venture entirely. It was clear to RAK Petroleum that Indago was not willing to commit more resources to the exploration blocks, said Alain Duport, the general manager of RAK Petroleum.
"Our partner was not so keen to do it," he said. "Since then the crisis has made a lot of trouble for many companies." RAK said that it intended to drill at least one well in the inland exploration block later this year. "If successful, the Zad prospect provides the potential of a significant gas and condensate field in a prime location only 10 kilometres from an existing pipeline accessing Oman's growing gas markets," said Bijan Mossavar-Rahmani, the company's managing director.
In February, Indago announced it had reached a settlement with insurers for the blowout at Jebel Hafeet that would leave it with $38 million in cash. The deal leaves Indago with only one remaining exploration hydrocarbon site in its portfolio: the 43A block in Oman, near Hatta, which it owns in partnership with RAK Petroleum. Executives at the company could not be reached for comment. cstanton@thenational.ae
