By Hector Igbikiowubo
LAGOSâ€”DESPITE claims that it was a committed indigenous investor set on expanding the scope of local participation in the nationâ€™s crude oil exploration and production, Camac Energy Holdings Limited, is set to finalize a Sales and Purchase Agreement with Pacific Asia Petroleum for all of its interests in Oyo oilfield.
A ranking Ministry of Petroleum official told Vanguard that the move, which comes on the heels of the companyâ€™s celebration of its first oil find, negates Federal Governmentâ€™s policy of expanding indigenous participation in upstream crude oil exploration and production and portrays the company as a venture capitalist which only got involved in the development for quick profit.
Last week, Pacific Asia Petroleum said it had amended the Sale and Purchase Agreement previously entered into with Camac and certain of its affiliates on November 18, 2009 with respect to the pending acquisition by the company of all of Camacâ€™s interest in the Oyo Oilfield, located offshore of Nigeria, which commenced production in December 2009.
Under the amended Sale and Purchase Agreement, the company has agreed to pay CAMAC $32 million in cash at closing, instead of $38.84 million as originally agreed. The balance of $6.84 million will be due and payable post-closing on the earlier of sufficient receipt of oil proceeds from the Oyo Oilfield or six months after the closing.
The amendment also addressed the allocation of revenues and expenses related to production from the Oyo Oilfield prior to the closing of the transaction.
In addition, the parties agreed to schedule the closing to occur on or before April 7, 2010, and removed the condition that Pacific Asia Petroleum raised a minimum of $45 million in equity financing before the closing of the transaction.
Following the closure of the companyâ€™s recent registered direct offerings raising $37.5 million, the company currently has sufficient cash to consummate the closing of the Camac transaction.
Commenting on the progress of the transaction, President and CEO, Frank Ingriselli noted, â€œThe rapid progress in this acquisition process has demonstrated the strength and commitment of Pacific Asia Petroleum and all the parties involved in this major transaction, and is a testament to the trust the investor community and our existing shareholders have put in our management and the Companyâ€™s new business direction.
â€œWe intend to issue our proxy statement for approval of the acquisition of Camacâ€™s Oyo Oilfield interest as soon as possible and, with the required shareholder approval, close this acquisition on April 7 and start to realize the benefits of moving from a development stage company to a profitable energy company.â€
All efforts to contact representatives of Camac to obtain a reaction proved abortive at the time of filing this report. However, when contacted, a Mr. Tajudeen Adigun, a spokesperson of Nigeria Agip Oil Company, a subsidiary of Eni said he could not speak on the development and advised Vanguard to speak with the managing director of CAMAC.
It would be recalled that while speaking at the official ceremony to mark first oil from the Oyo field, Mr. Kase Lawal, Chairman of Allied Energy observed that deepwater was a difficult terrain in terms of capital and technology, noting that determined investors can always make it.
He said: â€œWe serve as the testimony to the power of partnership, in terms of not just on paper. It is not getting an oil bloc and selling or getting a piece of paper or permit and selling it. Our partnership with Agip is a partnership of an integrated management team both from the Agip group and Camac group working together day and night to be able to get where we today.â€
It is expected that the Oyo field will initially produce 25,000 b/d of oil from two subsea wells connected to the FPSO Armada Perdana.
Vanguard learnt that the FPSO has a treatment capacity of 40,000 barrels a day of liquids, with gas treatment and re-injection facilities, and is capable of storing up to one million barrels of crude oil per day.
The associated gas will be re-injected into the Oyo field reservoir by a third well, to prevent flaring and to maximize oil recovery.
The Oyo project has achieved first oil production less than two years from sanctioning. Allied Energy and Eni hold 57.5 per cent and 40 per cent interests respectively, while Camac holds the remaining 2.5 per cent.