Agora Oil and Gas

Farm-in for oil

Formed by Norwegian and British oil experts, Agora Oil and Gas was established in October 2009 with the aim of being the most effective, efficient and profitable exploration company in the North Sea.

In the last year the business has already made two potentially commercial discoveries and recruited a further 13 employees, and is expecting to drill at least another two exploration wells later this year.

Agora began when executives from Norwegian exploration firm Revus Energy left to form their own enterprise after it was acquired by Wintershall at the end of 2008. Tim Sullivan, Agora’s UK manager, goes into further detail: “After Revus became part of Wintershall, a few of us left and started pooling our business knowledge on an idea which is similar to what Revus was doing, but with a twist. Agora’s work has been exclusively farm-ins on other people’s licenses; this is necessary because most of the North Sea area has already been licensed.”

The farm-in procedure means Agora pays a promoted cost of an exploration well above its working interest in a licence already owned by others. Its business model is to drill wells in areas of low geological risk. This is represented in its motto: ‘The easy oil has already been found, most of the rest is close by.’ The company is keen to explore in the mature areas of the North Sea for even greater profit, utilising its wealth of experience on the Norwegian Continental Shelf (NCS) and the UK Continental Shelf (UKCS). Business is already booming.

Agora is involved in one of the most significant UK Continental Shelf (UKCS) discoveries in recent years known as the Catcher Prospect, located midway between Norway and the UK. With a 15 per cent equity share of the licence, it was involved in the drilling of two appraisal sidetracks after the discovery, and by the end of the campaign expects the confirmation of a more than 240-foot oil column. Operated by Encore Petroleum, other license shareholders include Premier Oil UK, Wintershall and Nautical Petroleum.

Recent prospects near the Magnus Field in the UK Northern North Sea, named Tybalt, have also been drilled by Agora. Potential commercialsized 400+ foot oil columns were encountered in Tybalt West with further volumes present in Tybalt East. A drill stem test (DST) in Tybalt West flowed in excess of 6000 bopd. Valliant Petroleum is the license operator, owning an 80 per cent share and Agora is the only farm-in company, owning a 20 per cent share.

Tim explains why this system of farm-ins suits Agora so well: “Our strength lies in the ability to identify good exploration prospects. We don’t want to go out and establish ourselves as operators because that is not our particular skill. Our talents lay in identifying the best place for drilling and discovering the prospects withthe best chance of being commercial. If you only want to operate, as many companies do, you are restricting yourself because there are already many good opportunities operated by others.”

This highlights an important issue within the prospecting sector currently. In part because of the pre-crisis explosion of new small companies, and in part because of the crisis forcing budget cuts across the board, there are now more drilling opportunities than the finances will allow for. As such, there is a positive environment for well financed smaller firms to begin offering their services to larger businesses on farm-in agreements and Agora is one such company currently capitalising on that need. Previous company Revus generated 70 per cent returns on equity over the six years before its acquisition, and Agora believes it can achieve similar results even from the extensively drilled UKCS and NCS in the North Sea.

A $200 million investment over the next five years has been secured from RIT Capital Partners plc, and Lord Rothschild’s family interests, due to the Agora team’s track record and evident expertise. This has given Agora a secure financial basis with which it plans to develop a 25 well programme and continue acquisition not just by way of farm-ins but also in licence rounds and even possibly portfolio purchases as well.

One such future project is its participation in two exploration wells – PL 370 and PL 418 – on the NCS being operated by Wintershall Norge. With a 30 per cent and 20 per cent share respectively, Agora begun the Norwegian prequalification process in 2009 and was recently approved in August of this year. Drilling is expected to begin on these licences sometime during late 2011 or early 2012.

Despite its short lifetime, Agora has managed to use its past experience to full advantage and has hit the ground running with several major and minor projects already completed within its first 12 months. A strong business plan and further already-secured contracts look set to guarantee ongoing success in the company’s fortunes. Concluding, Tim is understandably confident: “Hopefully the farm-in market remains strong, and furthermore we hope to continue our drilling success into next year. There is a lot going for this company and our prospects are encouraging.”

Agora Oil and Gas
Services: Oil and gas exploration