Transcorp, Sacoil and EER revise Oil License Agreement
Transnational Corporation of Nigeria Plc., (Transcorp), SacOil Holdings Limited (SacOil), and Energy Equity Resources (EER) have agreed to revise the terms for their partnership in Transcorp’s Oil Processing License (OPL) 281 in Nigeria.
Director, Resources of Transcorp, Dupe Kupoluyi Olusola in a statement in Lagos said that the revised terms is as a result of a change of control in Transcorp adding that in conformance with the change, the company (Transcorp) will take full responsibility for the operation of the block in its bid to become a leading Nigerian indigenous oil & gas upstream company with production.
“The revised agreement is in line with Transcorp’s vision of building a pan-African energy business with strong indigenous operational capabilities. Transcorp Plc is excited by this development and is now poised to lead the process of bringing the asset to production.”
Olusola noted that Transcorp revised the tranches for the fees in OPL 281 for SacOil and its technical joint venture partner, Energy Equity Resources (EER) adding that SacOil paid $12.5 million towards the Signature Bonus on February 28, 2011, and $12 million now becomes due once the remaining conditions precedent to the farm-in agreement have been met.
The conditions listed include the perfection of title and all the necessary Nigerian government and Nigerian National Petroleum Company (NNPC) approvals in relation to the license.
By this revision, Olusola said EER’s 50 per cent portion of the fees will be carried by SacOil, a South African-based JSE- and AIM-listed Exploration & Production Company as an interest bearing loan to EER to be repaid from EER‟s entitlement to production in OPL 281 while Transcorp will remain the operator of OPL 281 and will pay 60 per cent of the costs to first production.
In the previous agreement she explained that SacOil and EER carried 100 per cent of the costs. Transcorp will also post the performance bond to the Nigerian government.
The Chief Executive Officer of SacOil, Robin Vela also noted that Transcorp is delighted with the revised terms because they will no longer be required to provide Transcorp with carry-on costs from the point of entry to first oil.
“All costs are now carried in proportion to the equity owned by Transcorp, EER and SacOil. SacOil and EER will be actively involved in the processes through the Operations and Management Committees.” The Sacoil boss asserted.
According to the production sharing contract (“PSC”) to be executed by the parties, a working program budget of $15 million has been estimated for the first phase of the exploration of OPL 281 which involves the acquisition of some 100 sq. km of 3D seismic data across the block and the drilling of at least one well.
A Competent Person’s Report issued by reserves auditing firm, AGR-TRACS International Limited, has attributed a gross un-risked contingent resource of approximately 100MMboe, with additional potential in two further prospects and deeper zones.