Afren Enters into a Farm-In Agreement with Oriental

Source: 4/1/2008, Location: Africa

Afren plc announced that it has entered into a farm-in agreement with Oriental Energy Resources Limited for the development of the Ebok Field, located offshore South East Nigeria. Afren has entered into its sixth indigenous partnership in Nigeria, with Oriental, to jointly develop the Ebok field (“Ebok”). Oriental was awarded a 100 percent. interest and operatorship of Ebok in May 2007 by the ExxonMobil / Nigerian National Petroleum Corporation (“NNPC”) Joint Venture. The farm-out has been structured such that the field benefits from the Nigerian Marginal Field Fiscal and Tax Regime. In addition, Afren has negotiated a collaborative agreement with Oriental on other potential development assets in the region.

Field technical description
Ebok is an undeveloped oil field located in OML 67, 50 km offshore in 135 ft of water in Nigeria's prolific south eastern producing area. The field was discovered by the ExxonMobil / NNPC JV in 1968 (M-QQ1 (Ebok-1)), and two subsequent appraisal wells were drilled in 1970 (Ebok-2 and Ebok-3). A total of 271 ft. (83m) of net oil pay was encountered in Ebok-1 in four sands between 2,600 ft. (800m) and 3,600 ft. (1,100m); none of the zones were production tested. 24 degree API oil was recovered from Ebok-1.

- Afren estimates that the field contains Stock Tank Oil Initially In Place (“STOIIP”) of 77 - 167 million barrels (mmbbls) (P90 - P10) in the two fault blocks tested by Ebok-1 and Ebok-2 with a mean of 118 mmbbls.
- Recoverable reserves in excess of 25 mmbbls based on analogous 20 – 45% recovery factors.
- Additional low risk appraisal potential is recognised in the adjacent undrilled Ebok West fault block which is estimated to have mean STOIIP of 63 mmbbls.
- Additional exploration potential is recognised in the Ebok North prospect with estimated mean STOIIP of 30 - 50 mmbbls and also in the deeper Qua Ibo sands.
- The Ebok area is covered with good quality 1992 3D seismic data and an extensive data set is available for the three drilled wells.

Ebok is located close to several producing ExxonMobil / NNPC JV fields and 55 km south-east of ExxonMobil’s onshore QIT Terminal.

Forward drilling programme
The appraisal and development drilling programme will follow a similar fast track schedule to Afren’s Okoro Setu Project:

- Appraisal drilling is scheduled for Q4 2008 with the objectives to acquire high quality oil samples, establish well deliverability, and acquire the reservoir data required for optimising the development plan; and
- Following a successful initial appraisal drilling outcome; submission of a Field Development Plan is anticipated for 2009 and first commercial oil production from Ebok could commence as early as Q1 2010.

Commercial terms
The Farm-In Agreement signed between Afren and Oriental defines the commercial terms under which Afren will participate with Oriental in the development of Ebok, and is subject to requisite Government and Farmor approvals. Under this agreement, Afren will pay a farm-in fee payable in cash and / or Afren shares, which can be satisfied by existing resources. In addition, Afren will be responsible for funding all capital and operating costs for the development of the field, and will recover the costs from 100 per cent. of net field revenues. Following cost recovery, the ExxonMobil JV will receive a Net Profit Interest, with Afren and Oriental sharing in net production revenues equally.

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Related Categories: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

Related Articles: Accounting, Statistics  Acquisitions and Divestitures  Asset Portfolio Management  Economics/Financial Analysis  General  Industrial Development  Insurance  Investment  Mergers and Acquisitions  Risk Management 

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