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Friday, February 6, 2015
Seplat Petroleum Development Co. completed the acquisition of a 40% working interest in OML 53, onshore the north-eastern Niger Delta from Chevron Nigeria Ltd. NNPC holds the remaining 60% interest in OML 53. The up-front acquisition cost to Seplat, after adjustments, is $259.4 million, of which $69.0 million had previously been paid as a deposit in 2013 and $190.4 million paid at completion.
The adjustments to the up-front acquisition cost include a deferred payment of $18.75 million contingent on oil prices averaging $90 per barrel or above for 12 consecutive months over the next five years. Seplat estimates net recoverable hydrocarbon volumes attributable to its 40.00% working interest to be approximately 51 million barrels of oil and condensate and 611 Bcf of gas. Seplat has been designated as operator of OML 53 pursuant to the Joint Operating Model approved by the Nigerian Minister of Petroleum Resources.
“This transaction fits neatly with our strategy of securing, commercializing and monetizing natural gas in the Niger Delta with a view to supplying the rapidly growing and evolving domestic market. In addition to the large scale discovered, but undeveloped gas and condensate resources that are yet to be fully classified through detailed technical work, there are near term opportunities to increase and optimize oil production significantly above current levels,” said Austin Avuru, Seplat’s Chief Executive Officer. “We very much look forward to working with NNPC and leveraging our technical and commercial expertise as Operator to realize the full potential of this high grade acreage,” he added.
OML 53 sees production from the Jisike oil field at a current gross rate of approximately 2,000 bpd, 800 bpd to Seplat on the basis of its interest in the acreage. Existing infrastructure on OML 53 at Jisike comprises flow-lines, phase one separation facilities and a flow station with a design capacity of 12,000 bpd and 8 Mmcfd. Oil production is then sent for further processing at the nearby Izombe facilities on OML 124 from where it is exported via pipeline to the Brass oil terminal.
Seplat said the block also contains the large undeveloped Ohaji South gas and condensate field, the development of which will be coordinated with the SPDC-operated Assa North field on adjacent OML 21, together referred to as the ANOS project. The expectation is that future gas production from the ANOS project will supply the domestic market, for which significant work on commercialization terms and development concepts has been undertaken. There is also shallow oil development potential at Ohaji South that could be pursued as a separate standalone project in the near term.
Prior to initiating development of the ANOS project, Seplat expects to focus efforts on increasing oil production at the Jisike field and development of the shallow oil reservoirs in Ohaji South.
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