Future is bright for Albania's energy industry, says Pennine director Wadsworth
March 24, 2016
In the wake of Bankers Petroleum Ltd.’s decade of energy development success in Albania, the southeast European country remains “relatively unexplored,” says Pennine Petroleum Corporation director and former Bankers president Richard Wadsworth.
On March 20, Bankers announced that it had agreed to a C$575 million takeover. Meanwhile, Pennine, which has signedthe main terms and conditions of a production sharing agreement for Albania’s Velca Block, has expertise, track record and knowledge of the region that is “difficult to emulate,” says Mr. Wadsworth.
In recent days, Mr. Wadsworth--who led Bankers through its formative years as co-founder, president and chief operating officer--discussed Bankers' success in Albania, the country's energy landscape, and Pennine's potential in a Q&A with Paydirt, the Pennine Petroleum Corporation e-newsletter.
Q: The announced agreement values Bankers at about C$575 million. You co-founded Bankers in 2004 with a treasury of C$2 million, and led the company as its president and COO through 2008. What factors allowed Bankers to be so successful on the Albanian energy scene?
A: First, let me congratulate the Bankers team for their successes and sale of the company at a 98% premium to its share price.
There were several key factors in our early success at Bankers:
Having a strong management and local team in place, with the attention and respect from the government to deliver on its commitment, was critical to negotiating and establishing the contract;
Focusing early on establishing increased production and recoveries from existing wells using proven technology, production practices, and environmental and safety stewardship allowed us to further expand on the respect from government, the local community and our stakeholders;
With year-on-year growth and success, stability of exports and cash flow, we were then able to attract the additional necessary financing to take on the next stage of redevelopment with horizontal wells.
We also benefited from a period, much like the past year, where oil prices were low and interest in international oil and gas was taken more by larger companies, thus enabling a startup junior oil and gas company to accept risks and capture such opportunities. Albania was continuing to improve after a regional period of uncertainty with the Kosovo crises.
Q: How do you view the potential for energy development in Albania today?
A: I believe that a strong and stable Albania is important to Europe, given the recent influx of refugees—some of whom have entered Europe, and some of whom are at Europe’s doorstep. Albania also has had a strong desire, for many years, to be a part of the European Union, and in 2015 took significant steps towards EU membership.
The potential for Albanian energy development is significant. It remains relatively underexplored, with the only current development underway being heavy oil from Bankers’ Patos Marinza field. Recent discoveries by Petromanas/Shell highlight the potential development of light oil resources. Having a strong oil and gas history in Albania bodes wells for attracting future exploration and development.
Albania may also play a key role in future gas supplies to Europe through the proposed Trans Adriatic Pipeline (TAP) gas pipeline. This would bring further power stability, as would the country’s vast water and hydropower potential. Potentially, these additional revenue sources for Albania would providing further stability, employment, transparency and openness to foreign investment.
All of these factors can make for a bright energy future for Albania.
Q: You joined Pennine’s board of directors in January 2016. What aspects of Pennine’s leadership group give you confidence that Pennine can be successful in Albanian energy development?
A: Our combined leadership brings a level of international experience, track record and on-the-ground Albanian knowledge that is difficult to emulate.
Additionally, (Pennine CEO) John Garden and I have worked together on several occasions, and this shared history creates a trust and comfort in one another’s abilities to build a strong team and deliver. While I was at Bankers, we brought John in to manage and oversee our horizontal development in the early stages of planning, and then drilling. This led to one of those “step changes” in Bankers history.
Q: Pennine has signed the main terms and conditions of a production agreement for the Velca Block. As a director of Pennine, what experience and expertise are you bringing to the table as part of Pennine’s integration into the Albanian oil and gas industry?
A: From 2001 to 2004 I led the joint venture on behalf of Premier, Albpetrol, IFC, and OMV. Through this experience, I learned what worked and didn’t work, with respect to license and petroleum agreements. With Bankers we renegotiated and created new agreements that ultimately allowed Bankers to create the success it currently enjoys.
Today, we live in a different environment, and this will require changes in the base structure of Albania’s petroleum agreements. Having managed this successfully in the past, and having continued to maintain strong relationship in-country, I hope to be able to help deliver a license and petroleum agreement that is mutually beneficial to Albania, its people and our shareholders.