Schlumberger Turns Morocco Farm-in into Licence Stake

Global engineering giant Schlumberger has turned its farm-in with Sound Energy, the Morocco-focused upstream gas company, into an equivalent shareholding in Tendrara Labkir, Anoual and Matarka licences, Sound said July 23.

This replaces the earlier arrangement, described as a "synthetic interest," and enables Schlumberger to take a formal seat at the table when the expected profits from sales gas roll in, as well as to ensure more drilling work for its engineers.

The decision follows the initial success in eastern Morocco and precedes the drilling programme, the operator Sound said. The decision is subject to the approval of the licence joint venture partners and the relevant Moroccan ministries.

Sound has an operated 47.5% participating interest. The remaining interests are held 27.5% by Schlumberger pursuant to an existing field management agreement entered into with Sound; and 25% by Morocco's L'Office National des Hydrocarbures et des Mines.

Sound Energy also confirms the two companies will continue their unchanged working relationship post-conversion; and their intention to continue to collaborate strategically across their interests in eastern Morocco, including in relation to the development of the existing Tendrara discovery and to the drilling at Tendrara, where Sound Energy and Schlumberger have now approved the first two defined wells, namely TE-9 and TE-10.

The joint venture partners intend to apply for a new, eight-year petroleum agreement over the entire, combined, eastern Morocco area, except the areas relating to the development concession and the Anoual petroleum agreement, shortly.

Sound Energy's CEO James Parsons said he was "delighted to have begun the process of bringing Schlumberger directly onto the various licences in eastern Morocco."

Schlumberger turns loss into gain

Schlumberger reported July 20 a Q2 2018 profit of $430mn, down 18% on Q1 2018 but up from the loss of $74mn in Q2 2017. CEO Paal Kibsgaard commented: “The second quarter was both busy and exciting for Schlumberger as we completed a number of major milestones in preparation for the broad-based global activity upturn that is now emerging."

Speaking generally about the outlook for oil demand, he said: “The market fundamentals continue to evolve favourably for our international business as the global balance of crude oil supply and demand tightens further. Global GDP growth remains strong, with any impact of headwinds from the US-China trade dispute likely to become clearer in the next few quarters. Despite Opec’s recent decision to increase production, the global supply base continues to weaken from geopolitical pressure to remove Iranian production from the market, no apparent resolution to falling production in Venezuela, and Libyan exports continuing to be volatile."