Addax Petroleum Corporation announced that it has been awarded an additional 7.2 percent participating interest in Block 4 of the Nigeria/Sao Tome and Principe Joint Development Zone (“JDZ”) by an independent arbitration tribunal. The award increases Addax Petroleum’s interest in the license area from 38.3 percent to 45.5 percent. Addax Petroleum is also the operator of Block 4.
Commenting, Jean Claude Gandur, President and Chief Executive Officer of Addax Petroleum said: "This award further enhances our leading position in this world class exploration region. I am very excited about the prospective oil resources of Addax Petroleum’s entire deepwater portfolio and I am looking forward to launching our high impact drilling campaign. Due to our interests across four JDZ license areas, a focused drilling strategy will be undertaken to include a consecutive exploration campaign of up to 10 wells across the region to demonstrate the full potential of these assets. I believe these exploration assets will be an important contributor to the growth of the company and will deliver value to our shareholders.”
In 2007, Addax Petroleum and ERHC Energy Inc. entered into arbitration proceedings in respect of a 9 percent participating interest in JDZ Block 4 that had been committed to a third party. When that party failed to fulfil its obligations, the 9 percent reverted to Addax Petroleum and ERHC. Under the arbitration proceedings, Addax Petroleum claimed entitlement to 7.2 percent of the 9 percent interest, subject to the carried costs associated with the balance, being the 1.8 percent to which ERHC was entitled. A panel of the London Court of International Arbitration confirmed that Addax Petroleum is entitled to the 7.2 percent additional interest for no additional monetary consideration beyond the $18 million previously paid by Addax Petroleum to ERHC. Addax Petroleum will continue to carry the costs associated with ERHC’s 19.5 percent interest in JDZ Block 4.
Addax Petroleum has contracted to commence drilling operations in JDZ Block 4 in the fourth quarter of 2008, but believes that the drilling rig will not be delivered until the second half of 2009. In the interim, the Corporation continues to seek a rig of opportunity to drill the 458 MMbbl Kina prospect in JDZ Block 4 as early as the fourth quarter of 2008.
The JDZ was established in 2001 following the ratification of a formal bilateral treaty between Nigeria and the island nation of Sao Tome and Principe. The JDZ is located approximately 200 kilometres offshore Nigeria and is adjacent to deepwater areas where several large petroleum discoveries have been made. As at December 31, 2007, NSAI estimates the total best estimate unrisked prospective oil resources for identified prospects in the JDZ to be 2,323.1 MMbbl (990.5 MMbbl risked), of which the Corporation’s working interest is 726.6 MMbbl (313.0 MMbbl risked), and the total best estimate unrisked prospective oil resources for the Kina Prospect to be 458.0 MMbbl (172.5 MMbbl risked).