INTERVIEW: 'Run by engineers': proprietary innovations help Perenco wring more oil from mature African fields

Anglo-French independent Perenco has crafted a niche by taking over oil assets dumped by majors in mature fields in Africa and using proprietary engineering solutions to squeeze out untapped barrels, CEO Benoit De La Fouchardiere told S&P Global Commodity Insights in a rare interview.

"We are going far beyond what has been left by the majors," he said at the company's London offices. "The way we work is different. We have a technical approach to everything we do. It is unique...we are run by engineers."

The company, which is owned by a single family and rarely speaks to media, produces 500,000 b/d of oil equivalent with projects in North and West Africa, as well as in the UK, the Americas, Turkey and Vietnam.

Core to its business is acreage in Cameroon, Gabon, the Republic of Congo, where it is among the biggest producers, as well as the North Sea, Fouchardiere said. Perenco recently entered Chad, where it produces 15,000 b/d and is "discussing some exploration acreage in Chad to add some production," Fouchardiere said. It is currently the only foreign oil company in the Democratic Republic of Congo.

Perenco is among a cohort of smaller, nimbler exploration and production players diving into African hydrocarbons in recent years just as oil giants Shell, ExxonMobil and Chevron withdraw in favor of giant wildcats in Namibia and Guyana and less carbon-intensive projects, such as LNG. However, the company has a long track record in Africa, dating back to its first Gabon acquisition in 1992.

Fouchardiere said Perenco spends 10% of its total budget on exploration, 10% on decommissioning and the rest on oil and gas production. "We are present across the value chain, from exploration to storage," he said. "We do everything: drilling, pipeline installation, gas terminal, gas power plant, down to the decommissioning."

Technical difference

Where the company sets itself apart, Fouchardiere said, is in designing proprietary engineering innovations tailored to individual projects and fields, from super compact hydraulic rigs to small drilling platforms made for forest exploration.

"End of life for an asset will happen if you do not find the technical difference that will allow you to recover more oil or more gas," he said. "When a major is leaving a field, sometimes they just have recovered 10%, 30% in best case 60%, and we are very good on working on the remaining percentage."

Rather than contracting out the drilling process, Perenco has 10 rigs of its own, allowing the company to save three or four times the costs, Fouchardiere said. "If you pay the price you will get the well. The problem is, me I don't want a well, I want that well. I want a well that fulfils the objective because the field is specific," he said. Based on the capex budget, water depth and other factors, Fouchardiere's engineers are tasked with finding a route to profitability.

As a result, Fouchardiere said, the company has been able to significantly outperform the majors in mature West and Central African fields. In the DRC, for instance, Perenco took over a number of marginal fields -- Liawenda, Kinkasi, Makelekese and Tshiende -- and managed to extract 80 million barrels in the past 20 years. In the Republic of Congo it took over a field drilled three times by TotalEnergies since discoveries were made in 1984. While the French giant never pumped any crude, Fouchardiere said Perenco was producing 7,000 b/d from the field within a year.

Highly selective

With a relatively small team and a single shareholder, Perenco is highly selective with the projects it invests in. Decisions to enter new countries are based on several factors, Fouchardiere said, including the quality of the asset, whether Perenco can make a difference technically, whether the company has control over the export route, and the contract.

Once a decision is made, "it's the same strategy," he said. "We build a gas to power. We develop a gas to industry. You can look at what are the remaining reserves, and do you have an export route [for LNG]."

A long-term approach focused on engineering, maximizing production at mature fields and exploiting local energy demand in Africa -- which is set to skyrocket due to population and economic growth -- means Fouchardiere does not "care" about the oil price and has no volume objective, he said.

"We think if it's too expensive there is a problem, so we need to fix the problem. Whether it is in the ground, drilling, surface. There is always a technical solution to any problem," he said. "If the oil price is at 40, you have to cope with 40 dollars."

Africa importance

Although Perenco has assets worldwide, Africa is at the core of its business, accounting for 345,000 b/d of its 500,000 b/d production in 2022. "Africa is important in terms of production, relationships, number of countries, and innovation," said Fouchardiere. "In Africa the relationship with a regulator is more a partnership, rather than in the UK where it is one way ...the bureaucracy is lighter in African than it is in developed countries."

The company recently bid on two oil plays in the DRC, an emerging producer that recently launched a bid round for 27 blocks, which have faced a major environmental backlash because they crisscross environmentally sensitive areas.

"We have put an offer in two of the blocks," Fouchardiere said. "We are in support. We are the only one in the country [so] we have to support what they do. We would love not being alone."

While the company sees "prospects across all of our permits", many of them close to infrastructure and easy to reach, Fouchardiere said its biggest production growth in the coming years will come in Congo-Brazzaville, where Perenco just picked up several producing assets from Italian giant Eni.

"Everything we do in Congo-Brazzaville we are above our best case," Fouchardiere said.