Rockhopper yet to make contact with government

The Maltese government has had no contact yet with the new owners of the oil exploration company that drilled a well in Maltese acreage offshore, without finding any indication of hydrocarbons.

Rockhopper Exploration, a Falklands-based exploration firm, acquired Mediterranean Oil & Gas just weeks ago on the eve of a drilling operation at the Hagar Qim well in Block 7 of Area 4.

Although Rockhopper ascribed “no value” to the well upon acquiring MOG for €37 million in May this year, the other licensee in the Hagar Qim well – Genel – proceeded with drilling the well.

Instead, Rockhopper speculated that acquiring MOG would give it “access to better exploration assets such as the Monte Grosso exploration prospect in the southern Apennines region of Italy” and new prospects in offshore Montenegro.

MOG’s and Genel’s subsidiaries – Phoenicia Energy and Melita Exploration – the operators of the Hagar Qim well, now have a six-month extension to the first exploration phase to evaluate the results of the Hagar Qim well.

But the ministry for transport and infrastructure, under whose portfolio the Continental Shelf Department falls, is taking heart that Rockhopper had offered MOG shareholders a ‘contingent consideration’ – more cash – depending on the success of the Hagar Qim well.

“The ‘no value’ given by Rockhopper Exploration was not related to the petroleum prospects of the area. The fact that Rockhopper is interested in exploration offshore Malta is a good sign which should be encouraged,” a spokesperson for transport minister Joe Mizzi said.

Over €8 million was spent just in data collection by MOG before Tony Hayward’s Genel was brought in with a 75% share in the licence for Hagar Qim in 2013.

Talks for the Rockhopper acquisition started in February this year, with the exchange of confidential information prior to the share acquisition. In March, Hayward estimated a 20% chance of success of Hagar Qim.

“Frontier oil exploration always carries a high risk,” minister Joe Mizzi’s spokesperson told MaltaToday. “Phoenicia Energy and Melita Exploration invested large sums of money for this exploration well and such an investment would not have been made if their technical and economic evaluation was not promising.”

But Mizzi’s ministry will not disclose the rates at which the government licensed Area 4 to MOG and Genel.

“These are commercial terms and the government does not release such terms. However it is important to note that all expenses related with the Hagar Qim well were paid in full by Phoenicia Energy and Melita Exploration, and all the exploration risk was assumed by these companies. The government has been gaining through rentals, administration fees, training and equipment fees as well as other bonuses since the time that the production sharing contract was signed in July 2008.”

Two companies have visited Malta since the government participated in the annual European Association of Geoscientists and Engineers conference in June, to view oil exploration data.

The government also signed an agreement with TGS for seismic data reprocessing, to provide oil companies with better information to evaluate the offshore acreage.