25th Sep 2008 07:00
Afren plc (AIM: AFR)
Completion of Acquisition in Côte d'Ivoire
London, 25 September 2008 - Afren plc ("Afren" or the "Company") is pleased to announce that it has completed the acquisition of Devon Energy Corporation's interests in Côte d'Ivoire and Afren has received full Government and regulatory approvals.
KEY HIGHLIGHTS
Osman Shahenshah, Chief Executive of Afren, commented:
"We are delighted to complete the acquisition in Côte d'Ivoire, which represents a step change addition to Afren's portfolio of 17 assets in 7 countries, adding existing production, proved reserves, development upside and ownership of a strategically important gas processing plant. Plans are underway to grow both the existing production and reserves through a combination of near and medium term development. We look forward to strengthening our partnership with PETROCI to further build our position in Côte d'Ivoire."
Enquiries:
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Afren plc
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+44 20 7451 9700
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Osman Shahenshah
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Chief Executive
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Galib Virani
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Investor Relations
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Jefferies
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+44 20 7029 8000
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Jack Pryde
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Merrill Lynch
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+44 20 7996 1000
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Andrew Osborne
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Morgan Stanley
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+44 20 7425 8000
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Jon Bathard-Smith
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Pelham Public Relations
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+44 20 7743 6676
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James Henderson
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Alisdair Haythornthwaite
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ASSET BACKGROUND AND NEAR TERM DEVELOPMENT PLANS
Block CI-11 (~48% participating interest)
CI-11 is currently producing approximately 1,670 bopd and 38 mmcfd gas (gross). The fields have been developed via a Mobile Offshore Production Platform and four tethered caissons. The oil and gas are piped to Abidjan, where the oil is sold on the open market and gas is processed by the LGP and sold under two long term contracts to domestic end users. Net 2P reserves are currently estimated at 11.6 mmboe as at the effective date (source: previous operator).
A wireline and rig based workover programme is planned in 2009, which will increase oil production and prolong the period within which current or greater gas offtake levels can be met.
Block CI-11 is located about 13 km offshore and 89 km from Abidjan in water depths ranging from 45 metres to 280 metres. The producing Lion and Panthère fields were discovered by Phillips in the 1980's and were brought on-stream in 1995 by United Meridian Corporation (UMC), later acquired by Ocean Energy Inc. which subsequently merged with Devon.
Other partners in the block are PETROCI, International Finance Corporation and SK Energy Co Ltd
Block CI-01 (80% participating interest)
Three separate significant hydrocarbon accumulations, Kudu, Eland and Ibex, were previously discovered by Esso and Agip. Net 2P reserves are estimated at 16.7 mmboe as at the effective date (source: previous operator).
Afren anticipates a market opening for CI-01 gas between 2010 and 2012, offering a near term development project with significant upside. The proposed concept is to develop the Kudu and Eland fields with anticipated gas sales via the LGP. The Ibex field offers an oil development opportunity plus associated gas that could be incorporated within a broader CI-01 development solution.
Block CI-01 was awarded to UMC in 1994, and is located in the easternmost part of Côte d'Ivoire offshore and shares an international border with Ghana. It extends from near the shoreline to 1,900 metres water depth and is about 52 kilometres from Abidjan.
Other partners in the block are PETROCI and SK Energy Co Ltd.
The Lion Gas Plant (100%)
The LGP receives gas from Afren's Block CI-11 and also associated gas produced at the Espoir and Baobab fields. The current throughput is ~35 mmcfd from CI-11 and ~35 mmcfd from the Espoir and Baobab fields, with a total Inlet capacity of 75 mmcfd. The volumes delivered over and above this by-pass the LGP and are sent straight to the end users. The LGP strips out 9 bbls/mcf of gasoline and 12 bbls/mcf of butane. Butane is sold into the local market at a fixed price, whilst the gasoline is spiked into the Lion crude stream and receives global prices. There is also the potential to extract and sell propane, offering further upside opportunity. The LGP enjoys tax exempt status, therefore cash generated offers a high margin per barrel of product extracted.
The Lion cryogenic straddle plant was constructed by Ocean Energy in 1998 to improve margins by extracting and selling high value Natural Gas Liquids from gas produced at Block CI-11. Gas production from adjacent Blocks CI-26 and CI-40, operated by Canadian Natural Resources Limited ("CNRL"), was added to the process stream, providing third party tariff revenue from the use of the Block CI-11 pipeline infrastructure, and additional gasoline and butane sales revenue at the LGP.
Glossary of terms
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bbls bcf bcfge boe bpd bopd boepd mcf mmcfd mmboe NGL US$ WI 1P 2P 3P |
barrels of oil billion cubic feet of gas billions of cubic feet gas equivalent barrels of oil equivalent barrels per day barrels of oil per day barrels of oil equivalent per day thousand cubic feet of gas million cubic feet per day millions of barrels of oil equivalent Natural Gas Liquids US Dollar working interest proven proven and probable proven, probable and possible |
Background information
Afren Plc
Afren plc (www.afren.com) was founded in 2004 with the vision to become the premier pan-African independent exploration and production Company, through a differentiated strategy based on a strong African representation in the Board and management, partnering with indigenous companies, partnering with National Oil Companies and Governments as well as finding a solution to the vast untapped gas reserves in the Gulf of Guinea. Since the Company's listing on the AIM market in 2005, Afren has rapidly expanded its portfolio to 17 assets across 7 African countries.
Note
In accordance with the AIM Rules, the technical information in this release has been reviewed and signed off by Mr Iain Wright, who is Director of Technical at Afren Plc and has over 25 years relevant experience within the sector. He consents to the information in the form and context in which it appears. The Company estimates its reserves in accordance with the guidelines and definitions of the Society of Petroleum Engineers / World Petroleum Congress ("SPE/WPC") reserves classification (March 1997) using accepted engineering principles.
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