The consortium on the Akepo field is expecting production to commence by the end of the summer. As previously disclosed, the Akepo-1 ST discovery well was tested and completed. Once online, the well is expected to produce between 2,500 and 3,000 gross bopd. The Akepo field is located in the shallow waters of the southeastern area of Nigeria in OML 90. Sogenal serves as the operator, holding a 30% interest; Exile holds 40%; and Oando holds the remaining 30% interest.
“Significant progress has been made on the Akepo field in the Niger Delta, offshore Nigeria, with first production from the field targeted for the end of summer this year. This will be the first production for Exile and a major milestone for the Company,” said Tony Henshaw, President and CEO of Exile. “The work being done at Akepo, combined with improving domestic policy for oil & gas development in Nigeria, and the pending Exploration License for Block 26 in Zambia, all make it an exciting and prospective time for Exile. The Company’s current cash position of roughly $2.7 million enables us to move forward on near-term plans for the Akepo field and continue building a targeted reserve base of more than 10 million barrels net to Exile. We are in active discussions to participate in additional Niger Delta discoveries, along with prospects in and outside of Africa.”
As was previously disclosed, the Akepo-1 ST discovery well was tested and completed earlier this year. Once on-stream, the well is targeted to produce between 2,500 and 3,000 gross barrels of oil per day. Exile is in partnership with Sogenal Ltd. Oil and Gas Company, who is the operator of the field, and Oando Exploration and Production Ltd, the technical partner, for the development of the Akepo field. The partnership has worked very well with Oando fulfilling all farm-in obligations, including the reimbursement of $2.1 million for costs incurred to Exile per the terms of the partnership. The remainder of Exile’s reimbursements are due at first oil.
Looking beyond the Akepo-1 ST well towards adding reserves to the partnership, several other exploration targets have been identified within the existing Akepo license area and are under evaluation.
Within the country, recent political events have focused on fair access to Nigeria’s oil and gas resources for both Nigeria-based independent operators as well as foreign companies. The recently introduced Nigerian Content Act has legislated, among other things, a specific amount of work must be performed by Nigerian independent operators. We believe the new law bodes well for Exile with both of its partners in the Akepo field (Sogenal and Oando) being Nigeria-based independent operators.
“The Nigerian Content Act demonstrates to us that the government, and in particular the new administration of President Goodluck Jonathan, is ready to take timely action in strengthening the oil and gas production and development landscape in the country,” said Seyi Ajibola, Exile’s Country Manager in Nigeria. “In light of this new legislation, Exile is in an excellent position with its partners to suggest fair and favorable development of the Akepo field.”
Additionally, the Nigerian Government has announced its intention to pass a Petroleum Industry Bill (PIB) in the near-term. This is a comprehensive piece of legislation that will address allocation of funds to the oil producing states in the Niger Delta, the structure of the Nigerian National Petroleum Company and its relationship with its Joint Venture partners such as the International Major Oil Companies (IOC’s), and introduce a revised fiscal regime.
It is possible that the smaller oil fields will benefit from enhanced fiscal terms, enabling them to be brought on-stream, and that there will be increased focus on indigenization, in particular in new licensing rounds expected in 2010. Larger fields may be subject to tighter fiscal terms, and there may be opportunities as larger international operating companies review their portfolios of projects. The PIB has received some criticism from the larger multinational corporations that are operating within the country.
Exile is positioning itself to take advantage of these changes where possible. Management has reviewed nearly 200 other undeveloped discoveries in Nigeria in preparation for the next licensing round, expected in the latter half of 2010.