Risk Management

Underpinning all of Nabirm’s activity is a focus on managing risk with a number of steps that are focused on balancing the Company’s risk exposure and guarding capital. This is intended to ensure that the Company is able to sustain its development in order to carry out  its goal of discovering material hydrocarbon accumulations.

 

Portfolio diversification

In order to balance its risk, Nabirm has developed its portfolio from a Namibian focus to that of the broader Atlantic margins, which now include pending applications in 2 countries in Western Africa. This provides a diversity in the asset base with a range of risk as well as a range of exploration maturity.

Capital discipline

Nabirm is dedicated to applying capital discipline in all that it does. All projects are carefully analysed and an opportunity’s risk versus value is measured at each stage of its development, ensuring that the portfolio is managed in line with its potential to deliver transformational growth.

Strategic partnerships

As a cost reduction strategy,  Nabirm looks to secure partners at each significant phase of investment. Through this partnering Nabirm aims to validate the potential of its current and future assets, improve the quality of the technical description through the contributions of these partners and fund exploration activities.

 Strategic positioning

Nabirm aims to identify high potential under explored regions of the industry, acquiring large equity positions at low cost with minimal commitment. As industry interest increase within these areas, Nabirm uses its vintage point to position itself as a “fast follower” rather than a “player opener” allowing it to use its own technical evaluation, as well as the integration of information from the outcome from third party activity. This enables the company to de- risk its assets as far as possible prior to drilling, ensuring stakeholders are exposed to the highest chance of success with a lower capital expenditure.

Nabirm is subject to various risks including those which derive from the nature of its oil and gas exploration activities. The following list sets out the Group’s principal risk and uncertainties and also provides details as to how these are managed.

 

RISK

DESCRIPTION

MITIGATION

Funding The nature of Nabirm’s business of exploring in offshore regions means that there are significant cost associated with seismic acquisition air gravity and drilling campaigns

Nabirm manages this risk in a number of ways. Nabirm closely mointors its cash position and each month produces updated cash flow forecast to help it determine whether it has sufficient resources to fund its short and medium term operations.

Nabirm also ensures that it always has adequate levels of cash on deposit with varying terms of maturity to match when significant items of expenditure become due. In addition Nabirm is continually seeking to exposure to large expensive project by engaging with farm-in partners with a view to reducing its equity stakes in the licences in which it operates to date, Nabirm has been successful in both managing its cash position and bringing large, well-funded partners into licences.

Exploration There is no assurance that Nabirm’s exploration activities will be successful Recognizing this, Nabirm continually seeks to manage this risk by managing its funding and financing risk as describe above and, in particular, by bringing in farm-in partners who have demonstrable technical skills and experience in similar projects worldwide.
Operating The nature of oil and gas operations means that Nabirm is exposed to risk such as equipment failure, well blowouts, fire, pollution and bad weather. In order to mitigate this risk Nabirm ensures that it adopts best class industry operating and safety standards, it has sufficient levels of relevant insurance cover and it only works with fellow operators and world-class contractors who can demonstrate similar high standards of safety, operating and financial capability.
Environmental Nabirm is extremely conscious of the environmental risks that are inherent in the oil and gas industry and, in particular, those that exist as a result of operating offshore. Given this, Nabirm works closely with the relevant ministries to ensure that all relevant environmental impact studies are undertaken in advance of any proposed seismic or other offshore operations that are undertaken and that best in class industry environmental standards and practices are adopted by Nabirm in all of its operations. Furthermore, for future seismic acquisition programmes, Nabirm will deploy marine mammal observers on vessels who are empowered to stop or modify the seismic programme if they deem necessary. Whilst Nabirm can never fully mitigate against the cost and implications of future changes in environmental legislation and regulation, its strong working relationship with the Governments in the countries in which it operates places in a good position to be able to work through any potential significant changes that could arise in the future.