Making the difference
Founded in mid 2006 by the world-renowned Aker Group, Aker Exploration (AkX) will soon specialise in the exploration of oil and gas in the northern part of the North Sea, Norwegian Sea and Barents Sea on the Norwegian Continental Shelf (NCS).
With the demand for oil and gas increasing by the day, the company will be charged with exploring the seas north of Norway to maintain high production levels and to avoid a decline in resources in the near future. While the company is still in its infancy, it has already secured an impressive number of licenses and is set to begin work on its first project this month.
Outlining the developments of the past 18 months and the vision for the company, Baard Johansen, AkX’s president and CEO, told European Oil and Gas Magazine: “The idea is to focus on increasing the capacity for exploration opportunities. We will be focusing on areas of the NCS where we are yet to find reserves of oil and gas.” That process will begin later this year, with a state-of-the-art rig nearing the final stages of production at a site in Dubai. “It is one of the biggest drilling units in the world and should be completed by Aker Stord in December. It has been designed to cope with deep-water operations, at the beginning it will be capable of drilling to depths of 1500m, although that could increase to 3000m. It is a very sophisticated installation – it has highpressure facilities on board and has a dynamic positioning system – with the very best technology for environmentally operation” he continues.
The hierarchy at AkX believe that there is significant profit to be made by concentrating primarily on the exploration phase of the exploration and production cycle. With the large number of new entrants in Norway, there will be a very active second-hand market for acreage with discovered reserves. Accordingly, it is the company’s intention to sell out of the licenses when reserves are confirmed, or to return the license to the authorities when a decision not to drill is made by the license group. In short AkX is aiming to unearth new oil and gas sources through license applications and swapping drilling capacity for stakes in licenses.
Commenting on how the company has developed it business model since it was formed, Johansen says: “The organisation is based on four main building blocks. The first is to access and operate the rig and the second is to secure the licenses. We also have to be sure that we have the financial strength to participate with an equity share of more than 30 per cent of those licenses. Lastly, we have to be certain that AkX has an organisation that is able to actually do that job. In the last 18 months they are the four areas that we have really focused on getting right.
“We have financed a three-year drilling programme and with the imminent arrival of the new rig, we will soon be drilling in 15-18 locations in the NCS, for which we have acquired licenses. The main strategy so far has been to use all the knowledge in the company – of the 31 employees, 18 are geologists or geophysicists – to select the appropriate licenses. What we can offer is a well-developed drilling organisation that is able to plan and execute projects as well as providing after-work services on the wells that are drilled. Our message to the market was ‘making the difference’ and the feedback we’ve had regarding the concept has been very positive.”
Baard Johansen and his team will soon get to prove that theirs is a concept that works; as a result of an agreement between AkX and Chevron AS, the company is participating in its first exploration drilling this month (May). It is based on a deal between the two companies that will see AkX acquire 12.5 per cent of an exploration license in the Norwegian Sea. In return Chevron’s license expenses for the remaining time in the area will be covered by AkX. Gas and condensate were discovered in the well in 2005 and it has the potential to produce resources of up to 180 million barrels of oil.
With such lucrative projects already imminent, Johansen believes that the prospects are good over the coming years for AkX. It is a belief that is further strengthened by the fact that the company is only three licenses from being at a 36 month capacity, as he explains: “Looking forward, I would say there would be many more exploration opportunities. We have a three-year contract in place, plus two one-year extensions. To fill a three-year portfolio you need 18 licenses, at the moment we have 15, so we are very well positioned.”
If the company’s initial experience is a good one, the prospect of expanding into wider operations in the oil and gas industry has not been ruled out – although exploration will remain AkX’s core area of expertise for the time being at least. “The company has been set up for exploration activity but that doesn’t mean that we will not take part in development and potential production in the future. We are not currently intending to do that but if it became a viable option in the future then it would be evaluated. The most value can be found be finding our own oil and gas so our primary focus is to operate in areas that have a high potential for reserves,” says Johansen.
There is a clear focus shared by all of the team at AkX – a team that has all the credentials to triumph in the exploration sector. By combining a truly ambitious and innovative business model with no small amount of know-how and ambition, the company has made a name for itself in this increasingly lucrative sector. It is an analysis that the president would seem to agree with. “Exploration is always a challenge, especially when you are moving into new or unknown markets, however we have fantastic personnel who have a great deal of expertise in the industry as well as the right equipment and organisation to achieve our objectives,” Johansen concludes.
Services: Oil and gas exploration