Lagos oil field faces setback, as firm sells stake

There were indications that the Aje oil field offshore Lagos may face further delay in its first production programme for March this year, as one of the stakeholders, MX Oil Plc has reached an agreement to sell its investment in the field to GEC Petroleum Development Company Limited (GPDC), for a total consideration of about $18 million.

The Aje shallow-water field has rescheduled to reach first oil at the end of March 2016 against the end of 2015 previously targeted by the joint venture partners on the project. This is the second time the production date is being postponed as the first target was December 2015.

MX Oil, in a statement recently confirmed that it has reached an agreement to sell its stake on the field, as about $3.5 million will be an initial payment to MX Oil in three stages. Accordint to the firm, the first payment of $2 million expected on or around March 14, and would be used to finance the remaining cash calls expected to be required for the investment in order to bring the field into production.

GPDC, he said would then send MX Oil a further payment of $5.75 million followed by another payment of $5.75 million six months later.

“The remaining balance of $3 million will then be paid in three annual $1 million instalments from the date of the exercise of the acquisition right, although these payments could be accelerated in the event that the oil price exceeds $45 per barrel for a three month period, according to MX Oil,” it stated.

Commenting on the development, MX Oil’s Chief Executive Officer Stefan Olivier, said: “We are delighted that we have now been able to finalise agreement for the sale of our investment in the Aje Field with GPDC which already has substantial assets within the region. I look forward to updating the market as the sale progresses and the Aje Field nears production.”

GPDC’s Chairman/CEO Joe Obiago said: “We are very excited by this transaction. The Aje Field (and OML 113) is a strategic fit for GPDC as it adds 10 million barrels of oil equivalent 2P net reserves and helps diversify our asset portfolio into the resources-rich Dahomey basin and the medium to long term gas supply play of Lagos and the West African corridor, which is an important hedge against volatile oil prices.

The asset complements our existing portfolio of five prime assets at various stages of development and achieves our immediate corporate objective of first production milestone in 2016.”

MX Oil had agreed to invest in a five per cent revenue interest in OML 113 via Jacka Resources on 13 July 2015. Other partners in the project are Panoro, Yinka Folawiyo Petroleum, New Age, Energy Equity Resources.

Panoro Energy revealed recently that the Aje field is one step closer to achieving first oil, following the completion of work on the asset’s Floating Production and Storage (FPSO) vessel.

The vessel is expected to arrive in Nigeria mid-March 2016, following a brief stop in Cape Town. Once the FPSO arrives in Nigeria it will be hooked-up to the mooring system and risers and a short test of the production systems will be conducted. Anchor handling operations at the Aje field started in January and will continue until mid-February, when subsea equipment including the manifold and flowlines will also be installed.

OML 113 covers an area of 835 sq km offshore Nigeria close to the Benin border and holds the Aje field as well as a number of exploration prospects. Aje, which was discovered in 1997, has multiple oil, gas and gas condensate reservoirs in the Turonian, Cenomanian and Albian sandstones, similar to the producing Jubilee field offshore Ghana.

The field is situated in water depths ranging from 100 to 1,000 meters approximately 24km from the coast of Nigeria. To date four wells have been drilled: Aje 1 and Aje 2 both flow tested oil and gas condensate at high rates, while Aje-4 intersected significant pay in four productive reservoirs.