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Nigeria: SacOil farms into Transnational Corps OPL 281
01 Mar 2011
Transnational Corp of Nigeria (Transcorp) has recorded another major milestone with the signing of a joint venture agreement with SacOil Holdings of South Africa to develop its OPL 281 oil field in alliance with Energy Equity Resources (EER).
The OPL 281 PSC is located onshore in the western delta region of Nigeria and is adjacent to the widely publicised Shell divestment block OML 42. It was awarded to Transcorp during the Federal Government of Nigeria’s mini bid round in 2006. And out of the US$30 million signature bonus, Transcorp has paid all but US$8.75 million. The outstanding signature has however been paid now by SacOil, on behalf of the Joint Venture and Transcorp.
Royal Dutch Shell, the preceding operator, had discovery wells Obote-1 drilled in 1970 and Ekoro 1 drilled in 1967 on OPL 281. A 3D Seismic obtained by Shell in 1991 and 1992 covers the entire block. Explaining the reasons behind the acquisition, Transcorp said 'The Joint Venture commissioned an independent competent person report, TRACS International which analysed discovery contingent resources of 250 MMBOE (Million Barrels of Oil Equivalent). TRACS analysis shows Obote-1 encountered hydrocarbons at four levels between 8720 ft and 12,350 ft, while Ekoro -1 found eight hydrocarbon sands between 8260 ft and 10761 ft respectively. Additionally it disclosed that 'It has discovered but undeveloped oil assets with an estimated recoverable contingent resource for the block of 100 million barrels of oil equivalent (P50 as reported by TRACS and a peak production potential rate of 30,000 barrels of oil per day).'
The joint venture shall acquire 40 per cent of Transcorp’s 100 per cent Participating Interest in the PSC for OPL 281 and SacOil’s direct interest in OPL281 would be 20 per cent. SacOil’s Nigerian partner, EER 281 Nigeria Limited, a wholly owned Nigerian subsidiary of EER, has also executed the same farm-in agreement to acquire an additional 20 per cent Participating Interest in OPL 281 and under the OPL 281 PSC, with Transcorp retaining the remaining 60 per cent. SacOil’s interest shall be held directly through a wholly owned Nigerian subsidiary.
Total farm-in fees of over $30m dollars will be paid by SacOil in several tranches upon attainment of certain milestones. The Joint Venture will carry 100 per cent of the minimum work programme cost as defined by the PSC for OPL 281.