The Agogo-1 find, unveiled this week by Italian major Eni, is Angola’s largest offshore discovery in years. It is located in deepwater Block 15/06, which stands as one of the most expensive exploration licenses ever after Eni and partners paid a signature bonus of around $1 billion to the Angolan government in 2006.
“Based on initial results, Agogo-1 likely holds around 165 million barrels of recoverable resources, making it the largest of three discoveries made in the area by Eni over the past 10 months. The find further cements the oil potential of the southern part of the block, which previously was considered to be gas prone,” said Palzor Shenga, a senior analyst with Rystad Energy’s upstream research team, after the discovery was announced on Wednesday.
“Even with this discovery, that massive signature bonus may never create value for Eni’s shareholders, judging by a fresh analysis of net present value conducted in Rystad Energy’s UCube Economic Model,” Shenga added.
More discoveries will likely be needed in order for Eni to provide its shareholders with return on the huge investments it has made in the block, and thereby justify the signature bonus. $7 billion have been spent so far on fees, drilling and development on the block while the current asset value of the block is $5 billion, according to UCube Economic Model by Rystad Energy.
Agogo-1, drilled at a water depth of about 1600 meters, follows hard on the heels of the Kalimba and Afoxe finds made last year. Rystad Energy forecasts that combined recoverable resources from these three discoveries could reach around 300 million barrels, confirming the success of Eni’s new exploration campaign on the block.
“The timing of these discoveries is perfect for Eni, as output from the producing fields in the block are declining. The operator is likely to fast-track these latest finds, and we expect to see them come online in the early 2020s. Collectively, the three discoveries are forecast to add around 80,000 barrels of oil per day at peak,” Shenga said.
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