Madagascar Oil

Madagascar Oil SA (a subsidiary of Madagascar Oil Limited, Bermuda) is a Malagasy company, founded by Sam Malin with South African businessman Michael Smith and Australian businessmen Robert Nelson. Madagascar Oil focuses on the development, exploration and production of petroleum. It is the principal onshore oil company in Madagascar in terms of oil resources and land. It holds the large heavy oil fields of Tsimiroro and Bemolanga. It operates the former, whilst its farm-in partner, French supermajor Total S.A. operates the latter.

History

Europeans found the Bemolanga field in the 19^th century and the Tsimiroro field in the early 20^th century. However, the extensive oil seeps associated with both fields had been known to the local Malagasy population for centuries. During the 20^th century various colonial and later overseas companies looked at the fields but never moved beyond initial exploration.

Sam Malin became aware of the fields in 1994. It took him nearly ten years to find financial partners to start an in-depth appraisal and ultimately development of the fields. As a result of his finally succeeding in his quest for such backing, Madagascar Oil was created in 2004.

Assets

Tsimiroro is a heavy oil field (14º to 16º API) which is reported to hold, in terms of a best estimate of reserves (oil in place), 3 billion barrels with potential for light oil and natural gas. Madagascar Oil holds a 100% interest in the field and is working on a steam flood pilot project as well as continuing drilling operations to expand the proven reserve base. Tsimiroro is believed to be able to achieve at least 80-100,000 barrels of oil output per day over 35-40 years. First production was realised in March 2008, a year when a total 2000 barrels were produced.

Bemolanga is a large ultra heavy oil field (8º to 13º API) holding a potential resources of 16.6 billion barrels, with approximately 2.5 billion barrels of recoverable reserves. Madagascar Oil and Total intend to set up a production pilot ahead of rolling out a full scale development (with a price tag of $8-10 billion). If development is successful, Bemolanga is expected to produce 180,000 barrels of oil per day for at least 30 years. Appraisal and planning work began mid-2009, while the development project is planned for 2013, split Madagascar Oil 40%:Total 60%.

In addition to the existing fields, the company holds more than 31,000 km² (12,000 sq mi) of exploration area which includes a number of historic discovery wells. In addition to the Tsimiroro block, which, in addition to the known heavy oil, has potential for light hydrocarbons, the company holds three exploration blocks: Manambolo, Morondava and Manandaza. These areas have defined potential reservoir structures with a potential capacity of over 1.0 billion barrels in potential capacity. Work undertaken for the company by Weiman Geoscience in 2007 explained the lack of success of the previous exploration wells drilled in Madagascar as well as pointing to the strong existing potential and mapping the potential fairways in each of Madagascar Oil's blocks. Not all of the historical work has been unsuccessful. On Madagascar Oil's blocks, examples include Manambolo West 1, drilled in 1987 and which flowed 15.6 mmcfd on a drill stem test as well as the Manadaza well drilled in the early 1990s that flowed 41º API light oil, albeit at a fairly low rate.

Madagascar Oil's projects are governed by production sharing agreements signed with OMNIS, the relevant Malagasy government agency, in 2004. These agreements give the Government of Madagascar a significant stake in future production.

On the 17th December 2010, Madagascar Oil's listing on the Alternative Investment Market of the London Stock Exchange was suspended and Madagascar Oil announced through the London Stock Exchange that Malagasy officials had expressed an interest in possibly buying a number of the company's exploration blocks. The company stated that there was no guarantee that fair value will be achieved for these potential sales but noted that all its licences are valid and that the obligations on both parties are legally binding. However, on 27th June 2011 the company's listing was unsuspended and trading recommenced.

Ownership and Management

Madagascar Oil is a public company listed on the London AIM exchange. It recently raised £50 million in its IPO to finance a pilot project in the Tsimiroro Field. Major shareholders include Touradji Capital Management, RAB Capital, Persistency Group, Plainfield, Blakeney Group, the John Paul De Joria Family Trust and Grafton Resources. The Chairman and CEO is J. Laurie Hunter and the COO is Mark Weller.

External links

• Grafton Resources website
• Official website of Madagascar Oil
• Total SA website
• Bermuda Monetary Authority website
• Weinman Geoscience Website

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