INTERVIEW: 'Agile' Angola-focused Corcel on track for first oil in Q4

London-listed Corcel expects first oil from its flagship Kwanza Basin project onshore Angola in the fourth quarter of 2024 as it presses ahead with plans to extract significant quantities of crude from existing discoveries in the West African country.

In a wide-ranging interview with S&P Global Commodity Insights, executive chairman Antoine Karam and Angola managing director Geraldine Geraldo said they were building an agile upstream production company through exploration and acquisitions in Angola and Brazil after recruiting an executive team with strong operational credentials and networks in the two jurisdictions.

Like its upstream rivals, Corcel remains bullish on medium-term global oil demand. But what sets the AIM-listed company apart are its residual early-stage battery metal mining assets in Australia and Papua New Guinea, which give it exposure to the energy transition.

"The fact that we are reflective in terms of asset distribution of the global energy mix means we will be able to weather the storm relative to anyone, regardless of what transition factors actually arise," said Geraldo.

Angola plans

Corcel's key acreage is its 18% working interest in block KON-11 onshore Angola, through its 90% share of Atlas Petroleum Exploration. Sonangol, Angola's NOC, is the operator with 30%, which is increasingly common in mature sub-Saharan African basins amid a widespread exodus of international oil companies.

KON-11, which sits south of the capital Luanda, was first developed by Petrofina in the 1960s and 1970s to the tune of 12 vertical wells, but operations ultimately ground to a halt with Angola's civil war after independence in 1975. Production from the Tobias field peaked at 17,500 b/d.

In December, Corcel said the Tobias-14 (TO-14) well had confirmed the presence of oil "throughout" following a successful result from TO-13. The wells confirmed that production could resume in the Kwanza Basin, ending a three-decade hiatus.

"We believe we should be hitting first oil in Q4 2024," said Karam. "We envisage an early production system to be in place by the end of the year." Historically Tobias wells produced 2,500-3,000 b/d, Geraldo said.

Corcel, previously a pure mining company, also holds a 22.5% working interest in neighboring block KON-12, which contains the Galinda field, which historically produced 2,700 b/d at its peak, and a 31.5% operated interest in the KON-16 exploration block, where Petrofina successfully drilled a wildcat in 1960.

"KON-12 is a brownfield. We will be preparing the groundwork with operator Sonangol and other partners to maybe do the first well next year," Karam said. Work on acquiring seismic on KON-16 will begin by early 2025, he added.

Unproduced prospective oil resources from KON-11 and KON-12 total 84 million barrels, according to the UK firm.

Karam said the company could soon be in the market for additional projects in Angola or elsewhere in Africa, most likely already-producing ones.

"Definitely we are going to be ambitious and very aggressive while staying within the focus and the core values of the company. So yes, we are interested to pick up other assets, other blocks in Angola," he said. "In other African countries it's going to be wait-and-see...We are looking into other jurisdictions but that is going to be 2025 onwards."

Geraldo added that plenty of work is still needed on Corcel's Angola acreage to reach its potential. "Our blocks have about 85 million barrels in the brownfield, 1 billion barrels in pre-salt exploration and half a billion in post-salt exploration," she said. "On a 20-year concession, just with that resource base, that is significant potential.

"These are low hanging fruits, they are onshore. So the focus now is really understanding the full extent of that portfolio and putting together a prospect and leads table to help us plan effectively on how best to extract these resources while keeping an eye on global market conditions," she said.

Karam and Geraldo praised Angola's business climate, which has won recent plaudits from executives, particularly the government's willingness to renegotiate fiscal terms and establish new ones for marginal fields.

The West African country is battling to reverse years of production declines, which have seen crude output fall from 1.9 million b/d in 2010 to 1.14 million b/d today, according to upstream regulator ANPG, due largely to underinvestment and insufficient exploration. Angola formally quit OPEC in January over a dispute over what it saw as investment-sapping quota cuts.

Corcel is also doing business development in Brazil with an eye on acquiring acreage in the South American oil producer, buoyed by similarities with Angolan basins and pre-existing networks.

"We are looking at some assets at a moment that is opportune we could capitalize on," said Geraldo, adding that "there is not [yet] anything material".

Transition position

Corcel is following a common junior path, looking to eke barrels out of pre-existing discoveries dumped by IOCs, reflecting a shift towards independents, NOCs and juniors.

"The only play in the industry for mid and small-caps is really going after discovered resource opportunities that have been sufficiently de-risked," said Geraldo. "And all you do to make sure that you extract value is be small, agile in terms of how you can move, and be able to turn the taps on and off to match what's happening in global markets."

To that end, Corcel's leadership sees plenty of upside in the global oil market and remains bullish on oil demand in the next 15 years, despite estimates of peak oil in the early 2030s.

However, Corcel has a trick up its sleeve, in the form of mining licenses for lithium, nickel, cobalt and rare earths in Australia and Papua New Guinea, diversifying its portfolio and giving it exposure to the energy transition.

"We have got a heavily-weighted portfolio that has conventional oil and gas assets," said Geraldo, "but we are also well-positioned in terms of our mining assets [battery metals] that could potentially down the line be instrumental in generating value if we do get to a point where the balance between hydrocarbons and renewables tips."