Elixir Petroleum announced that it has acquired an interest in, and been appointed operator of, highly prospective Block SL-4, offshore the Republic of Sierra Leone, West Africa (“Block SL-4”). Block SL-4 is one of six awarded offshore exploration blocks in Sierra Leone. The block comprises 4,429 km2 in area and is located nearby to exploration blocks held by large international oil and gas companies.
Terms of Acquisition
Elixir is acquiring an interest of up to 35% in Block SL-4 on ground floor terms. This acquisition is comprised of a 15% working interest (“WI”) in exchange for repaying 15% of the costs of a proposed 1,000 sq km 3D seismic programme, and an option to acquire an additional 20% WI on similar terms (“Option”). Elixir is required to pay its 15% share of costs on its 15% WI and to exercise the Option by no later than six months following the commencement of the seismic programme. Elixir is able to satisfy the Option exercise amount through the issue of fully paid ordinary shares in the Company at the then market price.
The planned 3D programme is expected to commence by no later than Q3 2008. Final terms for the 3D seismic acquisition are subject to current negotiations with service providers.
The Government of Sierra Leone has approved Elixir’s participation and its appointment as Operator of the Block.
Sierra Leone Exploration Opportunity – Highlights
- Offshore deep water exploration block with recognised hydrocarbon potential located in the Sierra Leone Basin.
- Block SL-4 covers an area of 4,429 km2 over the continental shelf, slope, and Sierra Leone Basin floor.
- A 2D seismic data set was acquired over Block SL-4 in 2003 which has identified a large number of significant leads and a variety of play types.
- Only two exploration wells have been drilled offshore Sierra Leone. Each well was drilled in the 1980’s in shallow water and encountered hydrocarbons. One well lies within Block SL-4.
- The offshore region of Sierra Leone is underexplored on the continental shelf and unexplored in deepwater. This can be attributed to the civil conflict in the country during the 1990’s.
- Participants in the six other awarded exploration blocks offshore Sierra Leone include Repsol YPF, Spain’s largest oil company and Woodside Petroleum Limited.
- Geological studies, well data, and seismic data acquired offshore Sierra Leone has established the presence of the essential petroleum system factors, being:
o Multiple oil prone source beds
o Abundant reservoir quality sandstones
o Adequate seals
o Varied and abundant trap types of size, and
o Synchronous timing and coincidence
- The proposed 1,000 km2 3D survey is designed to validate several potentially significant prospects and a number of leads identified on the existing 2D seismic data set.
Sizeable discoveries offshore Ghana and Cote d’Ivoire, including the Jubilee development, may provide analogies from which to target exploration activities in the Sierra Leone Basin.
- Petroleum contract terms are extremely competitive.
