Firm acquires major interest in deepwater block offshore Niger
By Yakubu Lawal
ADDAX Petroleum Corporation at the weekend disclosed that its wholly owned subsidiary has entered into a farm-out agreement with Starcrest Nigeria Energy Limited, an indigenous Nigerian oil company and has signed a Production Sharing Contract (PSC) with Nigeria National Petroleum Corporation (NNPC) in respect of Oil Prospecting License (OPL) 291 deepwater offshore Nigeria.
Addax Petroleum has a participating interest of 72.5 per cent and is the operator of the OPL.
Mr. Jean Claude Gandur, president and chief executive officer of Addax Petroleum while speaking on the development said that the addition of OPL291 to the company's deepwater exploration portfolio is truly exciting.
"The highly prospective nature of the property is underlined by its proximity to the nearby world-class Agbami oil field, which is currently under development. We believe that OPL291 offers significant potential to our company and its shareholders."
OPL 291 represents the mandatory relinquishment area of OPL216 following conversion of OPL216 to Oil Mining Lease ("OML") 127 preceding the development of the Agbami field in OML127 by Chevron.
OPL 291 was tendered by the Nigerian government under the 2006 mini bid round and was recently awarded to Starcrest.
In line with the expectations of the PSC, Addax Petroleum and Starcrest shall pay a PSC signature bonus of US$55 million to NNPC shall undertake an initial investment of US$75 million covering an initial work commitment, which comprises the acquisition of 3D seismic and drilling one well; and enter into a Memorandum of Understanding with NNPC to undertake an investment in an Independent Power Project (IPP), which would be developed with gas from a commercial development in OPL291 and agreement with NNPC on the technical and commercial arrangements should the IPP proceed.
In line with the farm-out agreement, Addax Petroleum is obligated to pay to the Nigerian government, 100 per cent of the OPL291 PSC signature bonus of US$55 million; to pay to Starcrest, a farm-in fee of US$35 million; and to pay Starcrest's share of OPL291 exploration and development costs, which will be reimbursed to Addax Petroleum from Starcrest's share of production revenues from OPL291.
OPL291 is located approximately 130 kilometres off the Nigerian coast, where the water depth ranges from approximately 1,000 to 2,300 meters and covers a gross area of 1,287 square kilometers (318,000 acres).
OPL291 is immediately adjacent to OML127 (to the east) which contains the Agbami and Ikija fields, operated by Chevron and OPL242 (to the west) operated by Devon Energy.
Addax Petroleum is an international oil and gas exploration and production company with a strategic focus on Africa and the Middle East.
Addax Petroleum is one of the largest independent oil producers in West Africa and has increased its crude oil production from an average of 8,800 barrels per day for 1998 to an average of approximately 83,000 barrels per day for the first eight months of 2006.
