18th Jul 2007 07:01
Afren PLC18 July 2007 Afren plc (AIM: AFR) Afren signs an agreement for participation in the development of the Eremor Field London, 18 July, 2007 - Afren plc ("Afren" or "the Company") announces that ithas entered into a Financing and Technical Services Agreement with ExcelExploration & Production Limited ("Excel") for the development of the EremorField in Nigeria. The Board of Afren is delighted to announce that it has entered into anagreement with Excel, an established indigenous Oil & Gas company, to jointlydevelop the Eremor Field ("Eremor"), an undeveloped oil field in OML 46, locatedin shallow water off-shore Nigeria. • Excel was awarded a 100 per cent. interest and operatorship of Eremor under the Federal Government of Nigeria's Marginal Field Programme. • The field is covered by 3D seismic data and is estimated to contain in place volumes of up to 30 million barrels in the D3.0 reservoir, with a similar potential upside in the shallower D1.0 reservoir. Recoverable reserves are estimated at up to 10 million barrels from the D3.0 reservoir. • Eremor is located close to existing infrastructure and within 12 kilometres of a number of Shell producing fields. The field was initially discovered by Shell in 1978 (Eremor-1), and encounteredfive hydrocarbon bearing zones: • Three additional wells were drilled to appraise the areal extent of the accumulation between 1984 and 1990. • The Eremor-1 well was re-entered in 2005 and a short production well test performed on the D3.0 interval. • Good oil samples were recovered of a low Gas to Oil Ratio, 22 degree API crude. Analysis of the test data indicates that flow rates of up to 2,000 bopd are achievable from the vertical well. • Eremor-1 is currently suspended and suitable for re-completion. Phase-1 of the Field Development Plan includes completion of the existing welland construction of a 7-kilometre oil evacuation line to the nearest flowstation. The Field Development Plan and Environmental Impact Assessment havebeen approved and development work will commence in the near term. The agreement signed between Afren and Excel defines the commercial terms underwhich Afren will participate with Excel in the development of Eremor. Under theagreement, Afren will be responsible for financing Phase-1 of the FieldDevelopment Plan, and will initially recover the investment from 90 per cent. ofnet field revenues. Following cost recovery, Afren and Excel will equally shareproduction revenue and costs. Osman Shahenshah, Chief Executive of Afren, commented: "I am delighted to announce Afren's fourth partnership with a well establishedindigenous company in Nigeria, which underpins Afren's commitment and strongcompetitive position to develop relatively low risk fields with significant nearterm upside that provide early cash flow and add to our growing reserve base.This follows the recent announcement of a Farm-In Agreement with IndependentEnergy for participation in the Ofa Field and takes Afren's portfolio to 11assets in 5 Countries, achieved in just over 2 years, offering a combination ofboth on-shore and off-shore near-term development and high impact explorationopportunities, with 15,000 to 20,000 barrels of oil per day from the existingportfolio by mid-2008. " 18 July 2007 Enquiries: Afren plc +44 20 7182 1800Osman Shahenshah Chief ExecutiveEvert Jan Mulder Chief Operating OfficerGalib Virani Investor Relations Jefferies International Limited +44 20 7618 3500Toby HaywardOliver Griffiths Tristone Capital Limited +44 20 7399 2480Simon Ashby-RuddMajid Shafiq Pelham Public Relations +44 20 7743 6673James HendersonAlisdair Haythornthwaite Background information EXCEL Exploration & Production Company Limited ("EXCEL") EXCEL was established in 2001 as an indigenous exploration and productioncompany. In 2003, EXCEL was awarded a 100 per cent. interest and operatorship ofthe Eremor Field, located in three metres of water, on Shell's OML 46 in theNiger Delta. EXCEL has a strong and diverse Board and Management team including Rear AdmiralMadueke, Kunle Areogun, Abiodun Awosika, Engineer Afoloabi Oladele, Pastor TaiwoOdukoya and Chief (Mrs) Agama. Afren Plc Afren (www.afren.com) was founded in December 2004 by a management teamincluding Dr Rilwanu Lukman, (Chairman), Osman Shahenshah, (Chief Executive) andBert Cooper (Advisor to the Board), with the vision to become the premier panAfrican independent Exploration and Production company. Afren's Chief OperatingOfficer is Evert Jan Mulder, who was most recently Chief Operating Officer ofAddax Petroleum, Nigeria's largest independent oil producer. Since its listing on the AIM market of the London Stock Exchange, Afren hasrapidly expanded its portfolio and the management team has delivered 11 assetsin the Joint Development Zone of Nigeria-Sao Tome and Principe, Nigeria,Gabon, Angola and Congo Brazzaville. In addition. Afren has built an executiveand non-executive management and advisory team with broad and extensiveexperience in the industry, both in West Africa and internationally; inidentifying and completing corporate expansion opportunities and in publiccompany financing. Afren also looks to leverage key relationships across theregion to gain preferential access to opportunities. Afren will continue to add to its diversified portfolio of near term developmentand high impact exploration, with the overall objective of creating substantialshareholder value. Current portfolio Nigeria Today's announcement marks Afren's fourth partnership with an indigenous companyin Nigeria, which is consistent with the strategy and commitment of partneringwith indigenous companies to target low cost development options that yieldnear-term production. • Okoro Setu development - Two appraisal wells were successfully drilled in Q4 2006 by Afren, the Technical Service Provider. A nine-month rig contract is in place for the Adriatic VI, with development drilling due to commence in Q4 2007. An FPSO has been secured, reserves certified by Netherland, Sewell and Associates (2P of 32 mmbbl) and the Field Development Plan has been approved by the Department of Petroleum Resources in Nigeria. First oil is targeted in Q1 2008 and circa 15,000 -20,000 bopd of oil achieved by mid 2008. • Ofa development - Discovered by Shell in 1970. Upon a successful well test, production should be achieved within eight to nine months at up to 4,000 bopd. • Ogedeh development - Existing discovery made by Chevron in 1993 in an area lying close to existing infrastructure. Various development options are currently under review. • Eremor development - Initially discovered by Shell in 1978. Phase I of the approved Field Development Plan is to re-enter and complete Eremor-1. Angola Cabinda Block B Heads of agreement have been signed for a 5 per cent. interest in Block B, ahigh quality exploration license containing existing discoveries (32 wellspreviously drilled without Seismic (4 wells testing light oil and 7 wells withoil shows). A 2D seismic programme is planned, followed by a 5-well explorationprogramme from 2008 onwards once Force Majeure is lifted. Congo The La Noumbi field (Afren: 14% interest) lies adjacent to the M'Boundi fieldand contains a number of high impact exploration opportunities. A well will bedrilled on the Doungou prospect in August 2007. Gabon Afren has interests in Themis and Iris Marin (12.86%) and the Ibekelia StudyArea (20%), which offer low cost exploration upside. The Admiral prospect inThemis Marin is due to be drilled in H2 2007. Nigeria - Sao Tome Joint Development Zone Afren's 4.41% interest in Block 1 of the JDZ offers exposure to a world classexploration acreage and in March 2006 Chevron made the Obo-1 discovery whichcontained 150 feet of net pay and proved a working hydrocarbon system in theJDZ. Note In accordance with the AIM Rules, the drilling update information in this reporthas been reviewed and signed off by Dr Nick Johnson, who is Head of Explorationand Production at Afren Plc and has over 25 years relevant experience within thesector. He consents to the information in the form and context in which itappears. The Company estimates its reserves in accordance with the guidelinesand definitions of the Society of Petroleum Engineers/World Petroleum Congress("SPE/WPC") reserves classification (March 1997) using accepted engineeringprinciples. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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