Afren has entered into a Joint Venture Agreement (JVA) with Oriental Energy Resources Limited and Energy Equity Resources (EER) for participation in the exploration, appraisal and development of OML 115 offshore South-East Nigeria, adjoining the Ebok and Okwok development area.
*Farm-in agreement with EER to acquire 81.25 per cent of its 40 per cent legal interest in OML 115 (32.5 per cent)
*Located offshore South-East Nigeria, adjacent and on trend with Afren and Oriental’s Ebok and Okwok fields
*Afren has identified significant exploration potential at the deeper Qua Iboe level, a regionally prolific reservoir productive at the nearby Zafiro field.
*Gross mean resources potential estimate of 270 mmbbls
*Extension of Afren’s partnership with Oriental on the Ebok and Okwok appraisal and developments; will benefit from further sub surface synergies with the opportunity for Afren to apply its enhanced understanding of the regional geology
*Total upfront cash cost of US $6 million including signature bonus and license extension fees, in addition to the requirement to drill one firm exploration well at an estimated cost of US $30 million.
*Drilling to commence with one exploration well scheduled for H2 2010
Under the terms of the farm-in agreement with EER, Afren as Technical Advisor will acquire a 32.5 per cent legal interest. The effective economic interest of between 77 and 100 per cent reverts to between 81.25 and 65 per cent (post cost recovery associated with the initial exploration work programme). Following cost recovery by both Afren and EER, Afren’s effective economic interest will revert to between 32.5 and 40.625 per cent of field revenues. Afren has undertaken to fund the drilling of one exploration well, after which Afren and EER will jointly fund costs pro-rata (81.25 per cent and 18.75 per cent respectively).
Following the farm-in to develop the nearby Ebok Field with Oriental in March 2008, Afren had entered into a collaborative agreement with Oriental to pursue other assets in the region. Afren subsequently farmed-in to the Okwok field in August 2009 and OML 115 represents another important milestone within the collaboration agreement. OML 115 benefits from the Nigerian Royalty Tax Fiscal terms.
OML 115 is in the translational structural setting of the prolific offshore eastern Niger- Delta, surrounding the Afren-Oriental operated Ebok and Okwok development area and close to the giant Zafiro Complex. The southern portion of the Okwok structure (Okwok South) extends into OML 115 and significant additional prospectivity has been defined within the channelized Qua Iboe system. Afren estimates gross un-risked resource potential of 270 mmbbls based on prospectivity defined to date.