In the world of geophysical contracting, there’s a taboo about companies that both acquire datasets and use them for prospecting. Many call it a conflict of interest; Jeff Hume calls it a business.

In addition to being beautiful, the Seychelles could be bountiful as well, with an estimated 1 Bbbl of oil in place. (Image courtesy of Black Marlin Energy)



And it has been a very successful one for Black Marlin Energy Ltd. (BMEL), the Dubai-based company Hume started 41?2 years ago. BMEL is an exploration company but owns two subsidiaries: Upstream Petroleum Services Ltd. (UPSL) and East Africa Exploration (EAX).

“UPSL is purely a services company,” Hume said. “It’s currently a geophysical services company, but we have possible plans down the road for it to be a drilling services company as well.

“BMEL is an exploration company with hopes of being a production company,” he said. “The services side is a tool. It’s part of what we do, and it differentiates us from the herd.”

The company hopes to go public later this year.

Finding what works

With a goal to more thoroughly explore this underexplored part of the world, Hume based his company in Dubai and chartered Seabird’s Geomariner to start doing some contract seismic work.



When Hume started BMEL he didn’t expect the services side of the business to open so many doors; he simply wanted to explore. “A lot of my career was involved in production 3-D surveys, 4-D, high-level geophysical things,” he said. “But I really like exploration. To be able to shoot a line in an area where nobody’s ever shot a line before and to see a new structure is one of the most exciting things in this business.”

Over breakfast in Houston one day Hume asked a colleague where he would explore if money and geopolitical issues were not a concern. His friend promptly answered, “Off the east coast of Somalia.” When pressed for reasons, he simply said, “It’s the biggest undrilled structure I’ve ever seen in my life.”

Another friend was brought up in Addis Ababa. “He drove all the way up and down the east African coast as a kid, and he told me, ‘There are oil and gas seeps all over the bloody place. This business about there not being a system there is completely ridiculous.’”

With a goal to more thoroughly explore this underexplored part of the world, Hume based his company in Dubai and chartered Seabird’s Geomariner to start doing some contract seismic work. “We kept the boat busy for eight months,” he said. “We just kept getting job after job. We were essentially just managing the boat, but we got good income off of it.”

In addition to the income, the work provided an introduction to the local governments. “They saw us as the prime mover,” he said. “It was a combination of being excited about getting into a new exploration area and the fact that we could take an asset on the services side and leverage it into better relationships with both the governments and the operators.”

Current activities

To date BMEL has drilled two wells with partners in the Nyuni field offshore Tanzania, resulting in the Kiliwani North gas discovery. These were drilled on seismic data shot by UPSL. However, due to concerns about more prolific wells in the Songo Songo field competing for limited pipeline and plant capacity, the decision was made to swap BMEL’s 10% stake in Kiliwani with partner Aminex and take Aminex’s 25% stake in two blocks and operatorship offshore Kenya.

“They paid us a cash amount as well,” said Hume. “And we got a higher equity interest in an area that we thought we could monetize more quickly. Our blocks are around Mombasa, and Mombasa has a refinery and a dual-fuel power station that could be switched to gas.

“We believe, and the Kenyans are encouraging us to believe, that should we find anything in those blocks, we should be able to monetize that very quickly.”

He added that the company will be shooting transition zone seismic later this year using the UPSL crew.

“In terms of an overall value, the structures are much bigger, and we think we’ve got some great drillable prospects not too far away from the well-known Pemba Oil seep. Of course, the difference is, we actually had gas at the wellhead at Kiliwani. As explorers that is a chance we take — but Nyuni vindicated our business model.”

In addition to Kenya, BMEL is focusing on Ethiopia and Madagascar, the latter of which it has a good relationship with despite the current political turmoil.

It also has two seismic crews, one land and one transition zone, with the capability to add another land crew. Both current crews are busy — the transition zone crew has four to six months of work lined up offshore Tanzania and Kenya, and the land crew is booked for the better part of 2010.

For Hume the blend of being a seismic company and an exploration company means that cash is generated during
the exploration phase of a project, reducing the company’s overheads.

“I think that’s one of the reasons why we’ve been pushed to take this public, because it’s a slightly different story to the ones you usually hear — give us money, we’ll spend it, and if we find oil and gas you make lots of money. Otherwise we’ll just come back and ask for more. BMEL is different,” Hume said.

The Seychelles

BMEL has returned to the Seychelles to acquire more seismic after acquiring 2,223 miles (3,650 km) of 2-D data in 2007. The new 670-mile (1,100-km) 2-D survey is designed to better image the potential reservoirs in the numerous tilted fault blocks to delineate the leads mapped in the southern third of Tranche A.

“We’re now at the drilling prospect definition level,” Hume said. “We’re now shooting specific data over specific prospects to firm them up. I know everyone says this, but I sat at the workstation this afternoon with our explorationists, and we are very excited about what we’re seeing. The lead we’re chasing is bigger, a lot bigger, than what we’d originally thought it might be from the sparse seismic that we had.”

BMEL is very much there with the blessing of the local government — Hume said the Seychelles National Oil Co. owns 8% of his company. “They could have negotiated back-in rights to their own projects, but they decided to spread the risk and make an investment in us as a company, which is highly unusual,” he said. Ras Al Khaimah Gas, a wholly owned subsidiary of the Government of the Emirate Ras Al Khaimah, also has a 28% stake in BMEL.

The company has been working in the Seychelles for four years and took an overriding royalty interest in the Petro-Quest acreage due to some technical work it performed early on. It has a 75% working interest in the rest of the licensed areas in conjunction with 25% partner Avana.

A great deal of technical work has been performed up to now, including intensive geochemical studies and finding the old side wall cores from two Amoco wells drilled there in the early 1980s. Hume said the work has led his team to prove conclusively that there is an indigenous oil system working in the Seychelles today that could include more than 1 Bbbl of oil in place.

Massive structures are obvious in both shallow and deep waters, though he said seismic has more difficulty imaging in the shallower water. “Some of the deepwater structures are huge and at much more reachable depths than what’s being done in the Gulf of Mexico or Brazil,” he said.

While tourism is a concern, most of that activity is in the Granite Islands, obviously not a site of great interest to an oil and gas company.

BMEL hopes to bring in “a big partner” next year and begin drilling in 2011 or 2012.

“We are very hopeful about the Seychelles,” he said. “Personally, I would love for us to be successful there because there are only 87,500 people, and they’re currently living under a major debt burden with the IMF. It’s rare you can say this, but if we had a commercial oil find in the Seychelles, the lives of the Seychelles people would change overnight, and that would give me a great deal of personal satisfaction.”