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EnerGulf/Derock Win Nigeria Block 252

Source: 9/6/2005, Location: Africa

EnerGulf Resources Inc. announced that its recently announced EnerGulf/Derock Joint Venture has been awarded deep water Block 252 by the Nigerian government at the Nigeria 2005 Bid Round held in Abuja, Nigeria. The joint venture is owned 60% by EnerGulf and 40% by Derock Nigeria Ltd. Block 252 lies in the Gulf of Guinea and covers an area of 939.69 square km. It has extensive seismic coverage including 546 square km of high quality 3D seismic data shot earlier this year by Veritas DGC.

The EnerGulf/Derock bid includes a signature bonus of US$81 million to be paid to the Nigerian Government within 90 days of confirmation of the bid acceptance. Signature bonuses for the deep water offshore blocks at the bidding conference were as high as US$310 million, with US$50 million being the minimum bid allowed by the Nigerian government.

A significant portion of Block 252 is within a major thrust belt that has yielded giant fields in Nigeria and neighboring Equatorial Guinea. Giant fields in the thrust belt include Nnwa-Doro in OPL (Oil Prospecting License) 218 (>500 MMBOE recoverable), Agbami (1000 MMBOE recoverable) in OPL 216, and Zafiro (1008 MMBOE recoverable) in Block B of Equatorial Guinea. The thrust belt is thought to be especially prolific due to the large structures and to commonly occurring stacked pay zones. Nearby in this trend, the ChevronTexaco Nsiko discovery in OPL 249 has tested 6500 BOPD (barrels of oil production per day), the Total Ukot discovery in OPL 222 flowed at more than 13,000 BOPD and, the Total Akpo-1 discovery well in OPL 246 tested at 9000 BOPD. Detailed analysis of the seismic data will be targeted at identifying the exact locations and sizes of specific structures.

Total reserve size of the seven world-class discoveries from the deep offshore is estimated at more than 3 billion barrels of oil and 16.2 trillion cubic feet of gas by the Nigerian government. The fields are Bonga, Agbami, Eha, Akpo, Bonga SW, Chorta, and Nwa/Doro. All blocks awarded at Round 2005 are awaiting a Presidential Decree as required by Nigerian Law.

Nigeria, a member of the Organization of Petroleum Exporting Countries (OPEC), is Africa's top oil producer and the 11th largest oil producer in the world, with estimated average production in excess of 2.5 million barrels per day in 2004. Nigeria has 35.2 billion barrels of proven oil reserves. The Nigerian government has a stated objective of reaching 40 billion barrels of proven reserves by 2010, with four million barrels per day in production. Nigeria also has natural gas reserves of 176 trillion cubic feet, ranking it in the top 10 globally.

Commenting on the award of Block 252, Jeff Greenblum, EnerGulf Chairman of the Board, stated: "We are so excited about being involved in the award of Block 252 by the Nigerian government. This is a world class opportunity for EnerGulf and its shareholders. We are studying financing options for this project as well as our other important projects. The award of Block 252 is an important step forward in helping us achieve optimum success and accretion for our shareholders in pursuing our Pan-African business plan of assembling a strong portfolio of high-impact oil and gas exploration opportunities.”

Also, commenting on the award of Block 252, Dr. Bill St. John, EnerGulf’s Senior Advisor for African Exploration said,” The Niger Delta in the Gulf of Guinea has proven to be one of the most prolific oil resource areas of the world. In my opinion, Block 252 ranked as one of the most attractive deep offshore blocks at round 2005. It is ideally situated in the regional setting of this great oil bearing region.

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