West Africa
We and our partners are moving forward on our development projects and evaluating our
additional discoveries offshore West Africa as described below:
Cameia Project (Block 21).
On February 9, 2012, we announced that the Cameia #1 exploration
well was drilled in 5,518 feet (1,682 meters) of water to a total depth of 16,030 feet (4,886 meters), at
which point an extensive wire-line evaluation program was conducted. The results of this wire-line
evaluation program confirmed the presence of a 1,180 foot (360 meter) gross continuous hydrocarbon
column with over a 75% net to gross pay estimate. No gas/oil or oil/water contact was evident on the
wire-line logs. An extended Drill Stem Test (‘‘DST’’) was performed on the Cameia #1 exploration well
to provide additional information. The DST flowed at an un-stimulated sustained rate of 5,010 barrels
per day of 44-degree API gravity oil and 14.3 million cubic feet per day of associated gas
(approximately 7,400 barrels of oil equivalent per day (‘‘BOEPD’’)) with minimal bottom-hole pressure
drawdown. Upon shut-in, the bottom-hole pressure reverted to its initial state in less than one minute.
The well bore used in the DST had a perforated interval of less than one-third of the reservoir section.
The flow rate, which was restricted by surface equipment, facility and safety precautions, confirmed the
presence of a very thick, high quality reservoir. We believe the well, without such restrictions, would
have the potential to produce in excess of 20,000 BOPD. On March 2, 2012, we submitted a
declaration of commercial well to Sociedade National de Combust´ıveis de Angola—Empresa P´ublica
(‘‘Sonangol’’) with respect to the Cameia #1 exploration well. During 2012, we drilled the Cameia #2
appraisal well, which was located approximately 2.2 miles (3.5 kilometers) south of the Cameia #1
exploration well and was successful in demonstrating lateral continuity within the reservoir originally
encountered by the Cameia #1 exploration well. The results from the Cameia #2 appraisal well were
also important as the well discovered a lower hydrocarbon-bearing zone at least 440 feet (134 meters)
deeper than that which was observed in the Cameia #1 exploration well.
On February 28, 2014, we submitted a formal declaration of commercial discovery to Sonangol
with respect to our Cameia discovery. In mid-April 2014, we spud the Cameia #3 appraisal well, which
we expect to utilize as a production well in the Cameia field development. The results of the
Cameia #3 appraisal well were successful and consistent with pre-drill expectations. A successful DST
was also conducted on the Cameia #3 appraisal well. On May 28, 2014, we submitted the initial
integrated field development plan for our Cameia project on Block 21 offshore Angola for approval by
Sonangol and the Angola Ministry of Petroleum. Given the current commodity price environment, we
believe an opportunity exists to review the project design concept and projected capital expenditures in
order to optimize the cost and scale of the Cameia development and production facilities prior to
formal project sanction. During 2015, we intend to pursue project cost reductions in light of the current
weakness in the market for goods and services utilized in major offshore development projects. We
remain committed to progressing the Cameia development towards project sanction and production,
and, to that end, we plan to spud the Cameia #4 well in the first quarter of 2015, which we intend to
utilize as a production well. Following drilling operations on Cameia #4, during 2015 we anticipate
drilling a water injection well, returning to Cameia #3 to re-complete it as a production well, and also
drilling another production well and a gas injection well, all for the Cameia development. We expect to
achieve formal project sanction of Cameia by year-end 2015, and first production from Cameia will
likely occur in 2018. The occurrence and timing of project sanction and first production from Cameia
are subject to obtaining adequate financing and the approval of a revised integrated field development
plan by Sonangol and the Angola Ministry of Petroleum. We are the operator of and hold a 40%
working interest in the Cameia project. Our partner in the Cameia project is Sonangol Pesquisa e
Produ¸c˜ao, S.A. (‘‘Sonangol P&P’’), with a 60% working interest.
Greater Orca Lontra Development (GOLD) Project (Block 20).
In the first quarter of 2014, we
drilled the successful Orca #1 exploration well on Block 20 offshore Angola to a measured depth of
12,703 feet (3,872 meters) and encountered approximately 250 feet (75 meters) of net oil pay in the sag
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