Afren plc announces that, as part of its strategy to aggregate and commercialise stranded gas assets in Nigeria, the Company has signed Production Sharing Contracts (“PSC”) for OPL 917 and OPL 907, within the Anambra basin, onshore Nigeria.
Highlights
• Afren through a Joint Venture (“JV”) with Global Energy Company Limited of Nigeria (“GEC”) a leading Nigerian based international oil and gas company active in oil and gas services across the Gulf of Guinea, has signed PSCs for OPLs 917 and OPL 907 and a signature bonus of US$1.6 million for each licence has been paid by the licence participants.
• The licences are located in the Anambra Basin, the second most prospective basin in Nigeria, with estimated remaining gas resources in excess of 5 trillion cubic feet (“Tcf”) of gas, yet the basin remains largely unexplored with only 30 wells drilled to date leading to six discoveries.
• The two licences cover an area totalling over 3,500 square kilometres.
• Both areas contain existing discoveries that require further appraisal and a number of additional leads and prospects have been identified.
- OPL 907 contains the Akukwa gas and condensate discovery, with estimated in place volumes of up to 400 billion cubic feet (“Bcf”).
- OPL 917 contains the Igbariam gas and oil discovery, with estimated in place gas volumes up to 300 Bcf and oil in place up to 80 mmbbl.
• The near term work programme includes additional data gathering and analysis on the existing discoveries. Additional high resolution 2D seismic data will be acquired over the existing discoveries later in 2008, prior to appraisal drilling in 2009. The seismic will also evaluate the identified exploration leads and prospects.
Osman Shahenshah, Chief Executive of Afren, commented:
“The announcement closely follows the cooperation agreement recently signed with E.ON Ruhrgas and African LNG to jointly investigate, develop, collect and monetise gas for domestic and export purposes. The two licences, with previous exploration history and two discoveries, are located in the under-explored Anambra Basin, where significant quantities of gas and condensate have previously been found. We are pleased to have also strengthened our relationship with GEC, marking our fifth indigenous partnership in Nigeria to date.”
Joe Obiago, Chief Executive of GEC, commented:
“We are pleased to have formed the AGER joint venture with Afren and to have successfully concluded Production Sharing Contracts on two highly prospective gas rich licences in the Anambra Basin. This is a significant step forward in GEC’s mission to be a major industrial player in the emerging gas utilisation market in Nigeria.”
Background to the Agreements
The JV partnership, Afren Global Energy Resources (“AGER”), has taken a 41% interest in OPL 907 and a 42% interest in OPL 917, and will act as operator of both assets. The JV agreement between Afren and GEC defines the commercial terms under which Afren will participate with GEC in the exploration and development of the two licences. Afren has a combined 50% interest in the JV, with GEC holding the remaining 50%.
OPL 907
Four shallow coreholes were drilled by Shell prior to the Akukwa-1 (1955) and Akukwa-2 (1956) wells that were drilled by Shell/BP. The Akukwa-1 well encountered gas and condensate in Cretaceous sandstones but was not fully evaluated. The Akukwa-2 appraisal well found approximately 500ft net gas pay in several horizons and produced dry gas on test.
The first stage of the initial work programme involves evaluating existing data, followed by the acquisition of 1,000 km of 2D seismic and the drilling of one or more appraisal wells on Akukwa.
Other participants on the licence are Buston Energy Resources Ltd (25%), Allenne Exploration & Production Ltd (14%), Kaztec Engineering Ltd (5%), VP Energy Ltd (3%), De Atai Oil Services Int'l Ltd (2%) and Bepta Oil & Gas Ltd (10%).
OPL 917
Two wells were previously drilled on the licence by Shell/BP. Igbariam-1 (1971) encountered gas and condensate with a reported 196ft net gas column and a 30ft condensate/oil column in Cretaceous sandstones; the well was not tested. The subsequent Ajire-1 well (1972) was water wet.
A number of prospects and leads have been identified south of the discovery well. The first stage of the work programme will be to carry out a full evaluation of the existing data, prior to acquiring new 2D seismic over the Igbariam discovery and identified leads and prospects, prior to appraisal drilling on the Igbariam field.
Other participants on the licence are Petrolog Oil & Gas Ltd (18%), VP Energy Ltd (17%), De Atai Oil Services International Limited (10%) and Goland Petroleum Development Co. Limited (13%).
The JV partners will also initiate a community engagement programme in the region.
