Niko Resources
Encyclopedia
Niko Resources is an India and South East Asia focused oil and gas exploration and production company that shares ownership of many exploration and development properties with Komodo Energy and Reliance Industries. Though it holds exploration rights to 37000000 acres (149,733.8 km²) of land in 7 countries production currently (2011) only takes place in India and Bangladesh. Major acquisitions include a $310 million November 18, 2009 purchase of Black Gold Energy (a move that made it a major player in deepwater exploration in Indonesia, the deal was completed in December 2009) followed by the 2010 $37.6 million acquisition of Voyager Energy which expanded its presence in Trinidad (that deal was completed in March 2010). Most of the company's revenue comes from India (85.92% in fiscal 2011 up from 81.6% in 2010/87.53% in 1Hlf10), revenue from India rose 106% in the 12 months ended March 2011 compared to only 3.9% for Bangladesh.
The company is investing heavily in Trinidad where in June 2011 it paid $78.1 million for offshore block 5c and is initiating exploration of another block (block 2AB). Though 58% of Niko's net exploration land position is in Indonesia (16.7M acres or 10X more than India) exploration expenditure in India is 2.6X higher ($50M vs $19M) than Indonesia (forecast to increase to 12X higher in 2012 due to drilling the D4 and D6 blocks (was only 1.4X more as recently as 2010); In terms of gross land holdings about a quarter of all land is in India (35,187 km2) Between 2001 and 2006 the market value of the company grew eleven fold.
which was awarded to it and the Gujarat State Petroleum Corporation
by the government of India on September 23, 1994. First production abroad began July 1995 at Hazira. The Hazira acquisition was the first in a string of large investments in India made by Niko; between 1994 and 2006 all major company moves were made in India.
In 2002 a natural gas exploration discovery it took part in (partnered with Reliance Industries
) turned out to be India's biggest and one of the world's largest for that year (the discovery was made in the Krishna-Godavari basin).
In 2008 it expanded operations outside of India, beginning with Pakistan (March, awarded 4 blocks), Madagascar (October, Grand Prix Block), Indonesia (November, awarded 4 blocks). Then in 2009 it purchased a 26% interest in a block in Trinidad, the block is held by a consortium of companies each with interests in it ranging from 29.25% (Centrica
) to 35% (Petrotrin
).
When it acquired Voyager Energy operations in Trinidad were expanded (Voyager held 4 blocks in the country including a 9.75% stake in the 2AB block, Niko's first (and only) interest in the region).
. The Cauvery block & NS (North Surat, NELP 2) block are 100% owned by Niko. As of March 2011 total 2P reserves are about 200 million barrels of oil equivalent (1.2 trillion MMcfe) 64% of which is natural gas; that represents a 24% overall decline since 2010 (proved reserves saw the biggest decline down 29%). 98.6% of proved reserves is natural gas. Less than 2% of production/revenue comes from Canadian and Bangladeshi condensate. Currently (June 2011) only 2 of the 7 countries Niko has major operations in contribute revenue; The other five countries hold 41.8% of total assets by value. Though expansion outside of India is significant the country remains the most important source of cash flow and production with revenue per Mcfe of oil/gas production nearly twice that of Bangladesh. Production and earnings are forecast to fall significantly in 2012 due to lower gas production at India's D6, D4 and 9 blocks and new terminal maintenance costs from the D6 block.
INDIA
TRINIDAD
KURDISTAN
MADAGASCAR
in January 2009.
The company is investing heavily in Trinidad where in June 2011 it paid $78.1 million for offshore block 5c and is initiating exploration of another block (block 2AB). Though 58% of Niko's net exploration land position is in Indonesia (16.7M acres or 10X more than India) exploration expenditure in India is 2.6X higher ($50M vs $19M) than Indonesia (forecast to increase to 12X higher in 2012 due to drilling the D4 and D6 blocks (was only 1.4X more as recently as 2010); In terms of gross land holdings about a quarter of all land is in India (35,187 km2) Between 2001 and 2006 the market value of the company grew eleven fold.
History
Niko Resources started out as an oil and gas company operating mainly in and around the Western Canadian Basin (Alberta and Saskatchewan); it wasn't until 1993 that the company showed interest in operating abroad. Its first venture into India involved the Hazira gas field (located SW of SuratSurat
Surat , also known as Suryapur, is the commercial capital city of the Indian state of Gujarat. Surat is India's Eighth most populous city and Ninth-most populous urban agglomeration. It is also administrative capital of Surat district and one of the fastest growing cities in India. The city proper...
which was awarded to it and the Gujarat State Petroleum Corporation
Gujarat State Petroleum Corporation
Gujarat State Petroleum Corporation Ltd is an oil and gas exploration company in Gujarat, India. It is India's only State Government-owned oil and gas company with the Government of Gujarat holding approximately 95% equity stake. GSPC was incorporated in 1979 as a petrochemical company...
by the government of India on September 23, 1994. First production abroad began July 1995 at Hazira. The Hazira acquisition was the first in a string of large investments in India made by Niko; between 1994 and 2006 all major company moves were made in India.
In 2002 a natural gas exploration discovery it took part in (partnered with Reliance Industries
Reliance Industries
Reliance Industries Limited is an Indian conglomerate company headquartered at Mumbai, India. The company operates through three business segments: petrochemicals, refining, and oil and gas, other segment of the company includes textile, retail business, special economic zone development and...
) turned out to be India's biggest and one of the world's largest for that year (the discovery was made in the Krishna-Godavari basin).
In 2008 it expanded operations outside of India, beginning with Pakistan (March, awarded 4 blocks), Madagascar (October, Grand Prix Block), Indonesia (November, awarded 4 blocks). Then in 2009 it purchased a 26% interest in a block in Trinidad, the block is held by a consortium of companies each with interests in it ranging from 29.25% (Centrica
Centrica
Centrica plc is a multinational utility company, based in the United Kingdom but also with interests in North America. Centrica is the largest supplier of gas to domestic customers in the UK, and one of the largest suppliers of electricity, operating under the trading names "Scottish Gas" in...
) to 35% (Petrotrin
Petrotrin
Petrotrin, the Petroleum Company of Trinidad and Tobago is the major State-owned oil company in Trinidad and Tobago. The company was established in 1993 by the merger of Trintopec and Trintoc, two state-owned oil companies. A third company, Trinmar was later merged into the company...
).
When it acquired Voyager Energy operations in Trinidad were expanded (Voyager held 4 blocks in the country including a 9.75% stake in the 2AB block, Niko's first (and only) interest in the region).
Operations
Exploration capital expenditure in the first half of 2010 ($96 million) was spent mostly in India (34.4%), Indonesia (28.1%) and Madagascar (22.9%). In India ownership of all major properties is shared with Reliance IndustriesReliance Industries
Reliance Industries Limited is an Indian conglomerate company headquartered at Mumbai, India. The company operates through three business segments: petrochemicals, refining, and oil and gas, other segment of the company includes textile, retail business, special economic zone development and...
. The Cauvery block & NS (North Surat, NELP 2) block are 100% owned by Niko. As of March 2011 total 2P reserves are about 200 million barrels of oil equivalent (1.2 trillion MMcfe) 64% of which is natural gas; that represents a 24% overall decline since 2010 (proved reserves saw the biggest decline down 29%). 98.6% of proved reserves is natural gas. Less than 2% of production/revenue comes from Canadian and Bangladeshi condensate. Currently (June 2011) only 2 of the 7 countries Niko has major operations in contribute revenue; The other five countries hold 41.8% of total assets by value. Though expansion outside of India is significant the country remains the most important source of cash flow and production with revenue per Mcfe of oil/gas production nearly twice that of Bangladesh. Production and earnings are forecast to fall significantly in 2012 due to lower gas production at India's D6, D4 and 9 blocks and new terminal maintenance costs from the D6 block.
INDIA
- Hazira: It is a matured gas field. The field complies with latest international safety standards like ISO & OHSAS. The field has recently completed cumulative 3 million safe working hours without LTI. The 50 km2 block (onshore and offshore) is 33% owned by Niko and contributes approximately 3% of total revenue (as of June 2011).
- D6 block in India (10% interest, production began in September 2008) - Although a major natural gas producer the company has recently been negatively affected by 5 year fixed price contracts. The D6 block was the largest natural gas discovery in company history, currently it also includes a gas processing plant (the block also includes the MA oil fields). Mining licenses expire in 2028. Contributed 85% of revenue in the quarter ended June 2011. Natural gas produced is purchased under long term contracts and sold on the spot market.
- D4 Block (15% interest, controlled by Reliance Industries (85%) - located in the Orissa Basin it covers over 4000000 acres (16,187.4 km²) of offshore land. Reserves at D4 are estimated to be double those at D6.
- NEC25 (10% interest, 90% by Reliance Industries) - covers over 3000000 acres (12,140.6 km²) offshore in the Bay of BengalBay of BengalThe Bay of Bengal , the largest bay in the world, forms the northeastern part of the Indian Ocean. It resembles a triangle in shape, and is bordered mostly by the Eastern Coast of India, southern coast of Bangladesh and Sri Lanka to the west and Burma and the Andaman and Nicobar Islands to the...
.
TRINIDAD
- Trinidad (Trinidad and Tobago is the largest exporter of Liquid Natural Gas to the USA) - five of the nine oil fields Niko owns interest in are controlling interests up from just two (Guayaguayare shallow (65%) and deep horizon (80%)) in 2009. In June 2011 Niko acquired a 25% interest in oil block 5C (covers 325 km2) from Canadian company Sonde for $75.5 million cash making Trinidad a core area for the company. In Trinidad exploration licenses are issued as production sharing contracts (PSC's).
KURDISTAN
- Kurdistan - Niko has few interests in the Kurdistan region of northern Iraq. Mid 2010, drilling activities were going on & potential test is yet to be done.
MADAGASCAR
- Madagascar - Few interests in Morondava basin.
Production
Averaged over the 2011 fiscal year (ended March 31) production was 294,765 Mcf (49,127 boe)/d due entirely to new production from the D6 block (oil increased 97% to 2784 bbls/d (9.4% of total), gas increased 22.3% to 278,060 Mcf (46,343 boe)/d (94.3% of total). In the first half of 2010 daily production averaged about 50,751 boe/d (93.9% natural gas, based on conversion ratio of 6000 cubic feet:1 boe) up 61.67% when compared to the first half of 2009 (31,393 boe/d, 96.1% natural gas). Contribution from the D6 block in India is largely the reason for the higher numbers (the D6 block also helped revenue because of higher realized prices there).Criticism
Between 2003 and 2006 Niko was possibly involved in a corruption scandal involving the $750 million Tengratila and Feni gas fields in Bangladesh (the company accidentally caused an explosion, initially refused to pay for damanges and gave the minister responsible for overseeing compensation claims an expensive vehicle; Niko eventually did compensate the 620 affected families). Investigation into corruption allegations were made by the Royal Canadian Mounted PoliceRoyal Canadian Mounted Police
The Royal Canadian Mounted Police , literally ‘Royal Gendarmerie of Canada’; colloquially known as The Mounties, and internally as ‘The Force’) is the national police force of Canada, and one of the most recognized of its kind in the world. It is unique in the world as a national, federal,...
in January 2009.