by Eric Fox

18-09-09 The oil and gas industry continues to foil the conventional wisdom about the scarcity of hydrocarbons in the world, turning in another discovery that indicates large reserves off the coast of Africa.

Anadarko's recent discovery
Anadarko Petroleum reported a discovery on block SL 6/07 off the coast of Sierra Leone. The Venus B-1 well hit 45 feet of net pay at a depth of approximately 18,000 feet. Although 45 feet of net pay is not that significant, the discovery does legitimize the existence of an "active petroleum system" off the coast of West Africa.
Anadarko Petroleum now has discoveries along an 1,100-km long coast, from Venus in Sierra Leone to Jubilee in Ghana.

Anadarko's partners on the well include Woodside Petroleum, Repsol-YPF and Tullow Oil, with a 25 %, 25 % and 10 % working interests, respectively, in the discovery. The discovery is a windfall for Anadarko Petroleum, as it has interests in more than 10 other blocks nearby. The company has 30 drilling prospects and 8 mm acres, and will drill two to five wells in 2010.
There's no doubt that the investor and analyst community has been eagerly awaiting the results of the Venus well. During Anadarko's last quarterly conference call prior to the Venus announcement, participants asked five questions about the prospect desperately trying to lure management into revealing any incremental information about the well.

Divesting African assets
Despite the discovery, there is, apparently, so much oil and gas out there to find that some companies left the region to concentrate in areas where they felt they could have more impact.
In the last few years, Devon Energy has divested its African assets. The company sold its portfolio in Equatorial Guinea in 2008 for $ 2.2 bn, and its portfolio in Ghana and Angola in late 2007.

Other major players
The majors have been in Africa for years. ExxonMobil has interests in Nigeria, Angola and Equatorial Guinea. General Electric is a major supplier to Exxon to help it develop these assets, and just signed a new contract to supply equipment for Exxon's Angola projects.
A smaller company with properties in the region is VAALCO Energy, which has offshore assets in Gabon and Angola.

The bottom line
Another day, another discovery of a major oil and gas deposit in the world.
Is it possible that the world is not running out of oil and gas, and a temporary mismatch between supply and demand, was misinterpreted as peak oil?

Eric J. Fox, is the founder of Brittain Capital Management, which manages the Alesia Fund, a Value oriented long/short investment partnership.