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Eland Oil acquires 40% stake in OML 17

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…..Needs $125m capital expenditure
 
Eland plc, a company focus in oil and gas exploration and production in Nigeria and West Africa has acquired 40 percent participating interest in the Ubima field, Oil Mining Lease, OML 17 from All Grace Energy Ltd.
 
The company acquired the 40 percent participating interest of the field which lies onshore in the northern part of River State through its wholly owned subsidiary Wester Ord Oil & Gas.
 
OML 17 is held by Nigerian National Petroleum Corporation, The Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited.
 
It is believed that the most recent independent 2C resources (Contingent
Resources) estimate for the Ubima Field is 34 million barrels of oil reserves. There is also a significant upside 3C resource (Contingent Resources) estimate of 66.9 million barrels of oil, with an extra 2C resource (Contingent Resources) estimate of 97 billion cubic feet of non-associated gas in two reservoirs.
 
Ubima field is said to have 3D seismic coverage and four wells which have been drilled in the field between the 1960s and 1981 with hydrocarbons being encountered in all four wells in multiple stacked reservoirs.  
 
The Ubima 1 well was suspended and identified for completion and production by the previous operator, but this programme was not executed. However, with the acquisition, Wester Ord is planning to re-enter this well and perform an extended production test, oil produced will then be trucked to the nearest sales point prior to the Ubima export pipeline being in place.
 
The Company believes that subsequently, an initial four development wells can be drilled and put into production nine to 12 months from commencement of the full work programme.
 
The full work programme according to the company is estimated to require development capital expenditure of $125 million, however a proportion of this is anticipated to be met from early cashflows from the extended production test 
 
Chief Executive officer of Eland, Leslie Blair, said the acquisition of the field is an attractive and accretive deal for the company.
 
“The acquisition of Ubima is a very attractive and accretive deal for Eland on very positive terms. As the Technical and Financial Partner we will be able to lead the development and move quickly to bring these assets into early production generating strong cashflow for the benefit of all stakeholders,” Blair said.
 
According to a statement made available to newsmen in Lagos by the company, Wester Ord, the subsidiary of Eland entered into a farm-in agreement with the Farmor for a 40 percent interest and as consideration for the assignment, will pay a signature bonus of US$7 million to the Farmor and, contingent on production and receipt of Ministerial Consent to the transfer of the participating interest, a production bonus of US$3 million.  
 
The statement stated that Wester Ord also entered into a separate commercial agreement to fund the initial work programme. The terms of this agreement entitle Wester Ord to 88 per cent. of production cash flow from Ubima until the costs have been recovered.
 
The statement reads “the Company will guarantee the obligations of Wester Ord under the farm-in agreement and the signature bonus will be paid from existing cash resources. The Company is currently in discussions to increase the existing debt facilities to fund the Ubima development. 
 
“The completion of the transfer of the 40 per cent participating interest from the Farmor to Wester Ord is contingent on the approval of the Head-Farmors and the Nigerian Minister of Petroleum Resources.
 
“Pending receipt of Ministerial Consent to the transfer of the 40 per cent participating interest, Wester Ord will exercise the rights and benefits of its 40 per cent interest in Ubima via the Financial and Technical Services Agreement which takes effect from completion. 
 
“The Ubima Field was awarded to the Farmor by the Department of Petroleum Resources in 2011. The award also included a commitment to develop viable small scale gas utilisation projects within 30 months of commencement of production. This could include a small scale power generation project where the availability of electricity in rural areas is severely restricted.
 
“The Farmor since the award of the Ubima Field has to date not conducted any work on the Ubima Field and therefore there are currently no profits / losses attributable to Western Ords acquisition of 40% of the field.  
 
“The field is close to existing infrastructure for the delivery of crude to market and Wester Ord are currently in discussions with The Shell Petroleum Development Company regarding the crude export tie in point.  
 
“As a designated marginal field, Ubima will benefit from attractive fiscal terms available in Nigeria as part of the government indigenisation programme.”
 
 
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Oil

FG Introduces New Incentives To Revitalize Nigeria’s Oil & Gas Industry

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In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.

The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.

The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.

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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.

The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.

This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.

These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.

The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.

 

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Tinubu set to approve ExxonMobil-Seplat oil deal, expands CNG bus initiative

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By Yemie Adeoye

NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.

The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.

“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”

The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.

“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.

Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.

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Oil

ExxonMobil To Invest $10bn In Nigeria’s Deep-Water Oil Operations

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As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.

Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”

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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.

Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.

We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.

“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.

On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.

 

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