As if it didn't have enough problems, London Stock Exchange listed Afren Plc has yet another problem to contend with. Leading indigenous producer, Amni International Petroleum Development Company Limited says its relationship with Afren through a Production Sharing and Technical Services Agreement (PSTSA) is at an end. Accusations are now flying back and forth over who is in at fault.  

Amni says that it was Afren that unilaterally terminated the Okoro Further Field Development project, located offshore in oil mining lease (OML) 112. According to Amni, Afren had, in a recent press release about the preliminary agreement it had secured for interim funding, said that it did not intend to execute the Okoro full field development plan. That, says Amni, was in default of their agreement. Accordingly, Amni served a default notice and gave Afren 30 days to remedy the breach and upon failure to remedy the breach, Amni went ahead and terminated the agreement.  

As more details emerged, it appears that although Afren responded to the notice of breach, Amni was not satisfied by the response. Afren failed, according to Amni, to satisfactorily explain in the letter of response how it intended to remedy the breach. Amni has dismissed the letter saying it does not accept that it was a reasonable resolution of the alleged material breaches. In addition to terminating the agreement, says Amni, it also intends to purse a claim in damages for the alleged breach.  

Afren meanwhile has issued its own statement regarding the purported termination by Amni. The company says that it vigorously disputes that Amni is entitled to terminate the PSTSA for the alleged breaches. Afren says it is willing to meet with Amni to discuss a way forward so that both parties can continue to collaborate in operations at Okoro.

The beleaguered company, which was not long ago, one of Africa investment success stories, says it is making good progress on satisfying the relevant conditions precedent to the provision of the interim funding and expects to finalise arrangements for its completion imminently, at which time it will also release its 2014 results. Afren has not commented on whether this dispute will put the interim funding arrangement in jeopardy.  

On another note, troubled Afren appears to have settled on a new CEO. The company reports that terms have been agreed in principle with interim CEO, Alan Linn, to continue as the new CEO of the company once the interim funding is completed. Alan Linn is currently acting as a consultant to the Board of Directors.

This dispute with Amni is yet another issue that the incoming CEO of Afren will have to deal with provided he is able to close the funding arrangement, which will provide $200 in interim funding. In the funding arrangement, shareholders are going to be diluted down after the management agreed a rescue package that will see the noteholders taking majority shareholding in the company.  

OML 112 (formerly OPL 469) is located offshore in water depths of 14 metres in the eastern part of the Niger Delta. The block was awarded to Amni on a sole risk basis in 1993 and converted to an OML in 1999. OML 112 covers an area of approximately 437 km2. Amni entered into a Production Sharing and Technical Services Agreement with Afren subsidiary, Afren Energy Resources Limited in March 2006 for the development of the field and production commenced in 2008.  

In 2012 the Okoro-13 exploration well discovered additional reservoirs to the east of the initial producing reservoirs. This led to the planning of the Okoro Further Field Development to develop the new reservoirs and provide additional barrels to the overall recovery from the two fields. The Department of Petroleum Resources approved the Field Development Plan in 2014.

Oando Energy Resources' has announced a significant increase in both Proved (1P) and Proved and Probable (2P) Reserves following the independent reserves and resources evaluation undertaken by DeGolyer and MacNaughton. It will come as no surprise however, in view of the ConocoPhillips acquisition.

In the period under review (December 2013 versus December 2014) proved net reserves (1P) increased by 78% to 288.5 MMboe, while Proved and Probable net reserves (2P) increased by 82% to 420.3 MMboe. Best Estimate (working interest) Contingent Resources (2C) correspondingly decreased by 78% from 547 MMboe to 122 MMboe as a result of the conversion of approximately 190 MMboe of 2C Resources to 2P Reserves due to the rebased evaluation utilizing the economic life of the producing fields. Also, net negative revisions of 246 MMboe occurred due to the current crude oil price environment, which has deemed certain contingent developments uneconomic.

Unrisked and Risked Mean Estimate Prospective Resources also decreased to 957.1MMboe and 229.6MMboe, respectively. The economic value (NPV 10% of Future Net Revenue) of the Proved and Probable Reserves (2P) increased by $545 Million (+44%) to $1,785 Million, largely due to the ConocoPhillips acquisition.

Oando said the report was prepared in accordance with National Instrument 51-101 "Standards of Disclosure for Oil and Gas Activities" of the Canadian Securities Administrators (NI 51-101) and the Canadian Oil and Gas Evaluation Handbook (COGEH).  

Speaking about the report, Pade Durotoye, CEO of Oando Energy Resources, commented: "We are very pleased with the new 2014 Reserves Numbers that confirms our thesis at the time we embarked on our transformative COP acquisition."  

"This large Reserves base gives us significant scope and opportunity to even further enhance production over the coming years and pursue in-field exploration opportunities that will further increase our Resource Base."  

OER currently has a broad suite of producing, development and exploration assets in the Gulf of Guinea (predominantly in Nigeria) and its sales production was 52,734 boe/d for the month ending February 28, 2015.  

Sahara Group has given an operational update on oil prospecting licence (OPL) 274. The energy group, which owns a 100 per cent working interest through its affiliate, Enageed Resources, says it is making good progress with its activities there. It is continuing to press towards optimizing opportunities in the block where it hit "first oil".

Sahara's upstream division last year doubled its certified 2P reserves in the Oki-Oziengbe South field in Edo State, Nigeria, making a new commercial discovery with the Oluegi-1 exploration well.

According to Segun Ogunwumi, Managing Director of Enageed Resource Limited, the Sahara Upstream company operating OPL 274, the company has continued to witness steady positive outcomes in its activities in OPL 274 preparatory to moving on to the phase of commercial production from the field. He said: "We are doing very well with our timelines and remain focused on the target ahead. We have an amazing collection of staff who are working alongside our regulators and key stakeholders and we remain confident that we will achieve our timelines and ultimately extract maximum value from what has been a historic success so far in OPL 274."  

Oluegi-1 was drilled directionally to a total depth (TD) of 14,887 ft. measured depth (MD) with a horizontal displacement of 2.7 km north of the wellhead and encountered five hydrocarbon zones, totaling 110 ft. of net pay.  

Sahara also drilled two successful appraisal wells, Oki-Oziengbe South 4 and 5. Oki-Oziengbe South 4 drilled directionally to TD at 12,520 feet MD 1.1 km SW from the well head, logging 211 feet of net pay in 13 hydrocarbon bearing zones, seven of which were new. The well flowed 43-44� API oil to surface on two tests at rates of 2400 and 3200 barrels of oil per day, with no water, on a one-half inch choke.  

Oki-Oziengbe South 5 also drilled directionally, to TD at 12,873 feet MD 1 km south of the wellhead. It logged 298 feet of net pay in 19 reservoirs, 15 of which were oil-bearing and seven of which were new. Sahara's successful drilling program followed a two year long, two-phase, land-swamp 3D seismic survey in the 871 km license. Sahara's seismic and drilling program achieved nearly two million man-hours LTI-free operation.

Enageed is now completing engineering tie-in to existing facilities, allowing first oil production to begin from Oki-Oziengbe S4 and S5 wells. Two pay zones in each well are being connected via flow lines to the Oziengbe S flow station some 3 km away. There, oil, gas and water can be separated.  

Since starting operations in 2004, Sahara has grown its upstream portfolio, building a strong foundation in a number of West African basins. It operates through a number of affiliates, including Enageed Resources which owns a 100 per cent interest in OPL 274, Sahara Energy Exploration & Production Ltd (SEEPL) which owns 45 per cent and 26 per cent interests respectively in deep offshore OPLs 284 and 286 and Sahara Energy Field Ltd (SEFL which has a 51 per cent interest in the Tsekelewu Marginal Field located onshore on OML 40. It also has interests in Ghana and Ivory Coast.

OPEC Daily Basket Price Stood at $54.04 a Barrel Friday, 10 April 2015

The price of OPEC basket of twelve crudes stood at $54.04 a barrel on Friday, compared with $53.52 the previous day, according to OPEC Secretariat calculations. The OPEC basket price has been hovering at between $50 and $55 since early February.

African oil producing countries are unhappy with the OPEC stance. Members the African Petroleum Producers Association (APPA) are planning to lobby OPEC over the decision to maintain production at the same level in spite of the crippling oil prices. APPA spokesman, Ousmane Doukoure said: "The council expresses its deep concern faced with this situation of falling crude prices, which hurts the economies of members and non-members of OPEC with the risk of social crisis if they continue."

Oil ministers from APPA represent 18 African oil producers. They have agreed to establish a platform for further engagement with other producers on the issue of output levels.

The new OPEC Reference Basket of Crudes (ORB) is made up of the following: Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Iran Heavy (Islamic Republic of Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), Murban (UAE) and Merey (Venezuela).

Transcorp Reassures Shareholders as SacOil Quits OPL 281

Transcorp is trying to re-assure its shareholders following SacOil's withdrawal from oil prospecting licence (OPL) 281. Transcorp issued a statement through the Nigerian Stock Exchange, on which it is listed, saying that SacOil's withdrawal would not affect the funding of the project. The block is operated under a Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC), which was finally signed in May last year. Sacoil said it is quitting the block as part of its ongoing portfolio rationalisation.

Commenting in the statement, the President and Chief Executive Officer, Transcorp, Mr. Emmanuel Nnorom, said "OPL 281 is one of the most prolific remaining oil and gas exploration assets in the Niger Delta and the substantial reserves form part of our integrated energy strategy, which combines power generation, downstream refining and petrochemicals. Sacoil's withdrawal has no impact on the funding of the OPL or our development plans."

Since signing the PSC, Transcorp said it has pursued an aggressive work programme aimed at bringing OPL 281 into oil and gas production by the end of 2017, and has so far acquired and evaluated some 150 sq km of 3D seismic, with its first well planned for drilling by the end of this year.

Explaining its reasons for terminating its interest in OPL 281, SacOil said it was in line with its strategy to focus on proven resources as a basis for growth. The company said it has embarked on a process of balancing and rationalising of its portfolio of assets and that the aim of the rationalisation is to restructure the company's future capital requirements and focus on cash generative assets and low risk exploration assets. It also wants to reduce future financial exposure.

SacOil paid $12.5 million towards farm-in fees on 28 February 2011, which Transcorp is contractually bound to refund with interest. In addition, SacOil will not have any future commitments and obligations associated with the appraisal of OPL 281.  

Explaining the new focus, Dr Thabo Kgogo, CEO of SacOil, said, "We are focused on increasing production in our low cost onshore asset in Egypt while we assess additional options for increasing value for our shareholders."

OPL 281 is an onshore oil block situated in Delta State. Transcorp signed a PSC with NNPC for the asset last year after winning it in the 2006 Mini Bid Round organised by the Ministry of Petroleum Resources. Tenoil provides the technical services support base for the exploration programme as well as managing the seismic and well delivery programmes on behalf of the project owners, Transcorp and its partners. Transcorp is the operator of OPL 281.

SacOil Reaches Settlement with Energy Equity Resources over Unpaid Loans

Following its decision to quit Nigeria, SacOil has completed a settlement agreement with Energy Equity Resources Norway Limited (EERNL), which restructures EERNL's debt obligations to SacOil in exchange for SacOil's waiver of certain rights and interests emanating from the Loans. However, SacOil retains the existing security over EERNL's 20% interest in OPL 233. The company said that the settlement would enhance its ability to recover the sums owed to the company and its shareholders.

SacOil advanced some loans to EERL and its subsidiary, EER, to secure a participation interest in OPL 233. The loans, which carried an interest rate of between 25 per cent per annum and 32 per cent per annum, with payment due in various instalments were secured against EER's 20 per cent interest in OPL 233.

According to SacOil, EERNL has been unable to settle the loans, which amount to date to approximately $24.2 million. SacOil was quick to re-assure its shareholders that the outstanding amount would not affect the accounts as the value of the security exceeds the value of the loans.

Giving more details of the settlement agreement reached with EERNL, SacOil said it had agreed to freeze interest on the outstanding sum from 30th November 2014. All proceeds received by EERNL in OPL 233 would be allocated to the repayment of the loans. Furthermore, 50 per cent of EERNL's net cash flow amount from oil mining lease (OML) 113 in which EERNL has an interest, is to be allocated to repayment of the outstanding loans if there are still sums outstanding by the time OML 113 comes into production. OML 113 contains the Aje Field, offshore Lagos, which is expected to come into production in Q4 of 2015.

In addition, pursuant to a farm-out agreement executed between SacOil, EER 281 and TransCorp in relation to OPL 281, SacOil advanced additional funds on behalf of EERNL to secure the farm-in into OPL 281. The two companies have agreed that in full and final settlement of the amounts advanced by SacOil in respect of OPL 281, SacOil will repay $12.5 million plus interest. This sum is due to come from Transcorp's refund of the sums paid by EERNL (but financed by SacOil) to Transcorp for a participatory interest. EERNL will turn this payment over to SacOil.  

The settlement agreement also terminates the Master Joint Venture Agreement between SacOil and EERNL, dated 24 September 2010.

Commenting, Dr Thabo Kgogo, CEO of SacOil, said, "This settlement reflects the restructuring of the loans advanced to the EERNL Group and the consequences of our termination of the OPL 281 contract with Transcorp. It also brings an end to the Master Joint Venture Agreement with EERNL with regards to the joint investigation of new exploration opportunities."

Midwestern to Acquire Mart Resources

Toronto Stock Exchange listed Mart Resources has entered into a definitive arrangement agreement with Midwestern, the operator of, and one of Mart's co-venturers in the Umusadege marginal field. Pursuant to the Arrangement Agreement, a wholly owned subsidiary of Midwestern will acquire all of the issued and outstanding common shares of Mart by way of a plan of arrangement under the Business Corporations Act (Alberta), including the assumption of all outstanding bank debt of Mart (currently, approximately US$200 million owed to GTB). Each Mart shareholder will receive CDN$0.80 in exchange for each Mart common share held.

The Arrangement is subject to customary conditions, which include court approvals, applicable regulatory and stock exchange approvals, including Investment Canada Act approval if required, the approval of 66 2/3% of Mart shareholders and 66 2/3% of Mart shareholders and option holders (voting together as a single class) represented in person or by proxy at a special meeting of Mart shareholders and option holders to be called to consider the new arrangement.  

Midwestern is required to satisfy a number of financing conditions on or before the 15th of June. The indigenous Nigerian company which was able to provide references from Rand Merchant Bank and FBN Capital Limited for the transaction, has to provide copies of written binding commitments that have been entered into with investors in the proposed financing on or before May 15, 2015. If it is unable to meet the financing condition, Midwestern will be required to pay a reverse break fee of CDN$5.8 million to Mart.

The Arrangement Agreement also includes customary non-solicitation covenants by Mart, which leaves Mart with the ability to respond to unsolicited proposals. If Mart should accept a better offer, it will be required to pay a break fee of CDN$5.8 million to Midwestern. Midwestern has the customary right to match any such offer.

Apart from its interest in Umusadege, Mart is a member of the Eroton Consortium established to acquire a 45% participating interest in OML 18 in the latest Shell divestment. The acquisition was completed in March at a total purchase price of $1.1 billion excluding acquisition costs. Mart holds an indirect working interest in OML 18 of approximately 10% through its share ownership of Martwestern Energy Limited that in turn owns 50% of the shares of Eroton. In spite of its recent trend to assume operatorship of the divested assets, Nigerian Petroleum Development Company, a subsidiary of the Nigerian National Petroleum Corporation, which owns a 55 per cent interest in OML 18, will not be the operator of the asset. Eroton has been appointed as an operator of OML 18.

Leading consultancy group, Wood Mackenzie has been looking at the landmark victory of the All Progressives Congress' (APC) and in this note, highlights the key considerations for the country's oil and gas industry following the elections.

Wood Mackenzie noted that President Goodluck Jonathan's early acceptance of the result greatly reducing the risk of unrest, thereby creating a positive impact on the oil and gas industry.

Wood Mackenzie however sees a time of new challenges and uncertainties for the oil and as sector as the first civilian government other than the People's Democratic Party is elected into office.

Key considerations noted by Wood Mackenzie for the oil and gas industry are:

• A series of new appointments will be made throughout government - among them a new minister of petroleum resources and a new head of the national oil company, the Nigeria National Petroleum Corporation (NNPC) is also likely. The new government's transition period could also result in delays to ongoing deals that have not yet been approved.
•  In 2008, the PDP government proposed wide-ranging legislative and fiscal reform under the Petroleum Industry Bill (PIB), but passage had stalled.  APC's position on industry reform is not yet known, but the PIB will be redrafted. 
• The industry's biggest fear is a sudden change of fiscal terms - particularly for deepwater production sharing contracts (PSCs) - in a bid to increase Government revenues, countering the deficit.  Even in a low oil price environment, Wood Mackenzie warns this risk cannot be ruled out.
• Nigeria's onshore production has been seriously affected by growth in oil thefts, leading to losses of upwards of 150,000 barrels per day (b/d) and equating to billions of dollars of lost revenue annually - for both operators and government. 
• APC has expressed intent to tackle oil theft as a priority. Wood Mackenzie says that while the industry would welcome reduced losses, a 'get tough' approach could worsen the already difficult operating environment in the onshore Niger Delta in the short term. 

Wood Mackenzie is a global energy, metals and mining research and consultancy group with an international reputation for supplying comprehensive data, written analysis and consultancy advice.

SPDC- Provision of Calendars, Diaries and Greeting Cards

Shell Nigeria Exploration and Production Company Limited (SNEPCO) invites interested and registered Nigerian companies to respond to the opportunity for the provision of calendars, diaries and greeting Cards. The scope of services involves the provision of printing of 14 page SPDC calendar (front and back) full colour processing using, calendar size is. 24 x 16 inches paper quality 170 gms matt paper. 4000 gms chipboard backing for calendar, printing of Shell A4 diaries, A5 diaries and pocket diaries with Shell pectin, case bound A4/A5 size desk diary in a folder, executive diary day page per day. Only Tenderers who are registered in the relevant NJQS product/category categories shall be invited to submit technical bids. The closing date for this opportunity is 15th April 2015

Enageed - Provision of Drilling & Completion Services

Enageed Resource Limited (Company) invites interested and registered Nigerian companies to respond to the opportunity for the provision of drilling & completion services. The scope of services involves the drilling and completion of an estimated twelve (12) land wells and two (2) wells on swamp locations. Only Tenderers who are registered under the relevant NJQS Product/Category shall be invited to submit technical bids. The closing date for this opportunity is 20th April 2015.

Agip - Provision of Evacuation, Treatment and Disposal of Weathered Oil/Sludge Services

Nigerian Agip Oil Company Limited (NAOC), invites interested and registered Nigerian companies to respond to the opportunity for the evacuation, treatment and disposal of weathered oil/sludge services. The scope of services involves the mobilization, evacuation/transportation and treatment of relevant personnel and equipment to site for the purpose of executing the service. Only Tenderers who are registered with NJQS product/service categories shall be invited to submit technical bids. The closing date for this opportunity is 22th April 2015.

Star Deep Water Petroleum - Provision of Tubular Inspection Services

Star Deep Water Petroleum invites interested and registered Nigerian companies to respond to the opportunity for the provision of tubular inspection services. The scope of services involves the provision of vendor review of mill test reports, manufacturing and testing schedules, and test procedures and pass / fail criteria for compliance with relevant API specs, support and/or development of quality plan, online quality documentation and manufacturing reviews to support in-mill and in-threaders and in-country non-destructive and destructive testing and inspection, vendor surveillance services at the mill to ensure compliance to company and relevant API specifications, including latest edition of 5CT. Only Tenderers who are registered with NJQS Product/Category 3.07.98 (other inspection services - bop, drill rig, electrical, paint, rotating equipment, structural, tubulars, video, weld) Category A, B, C Or D Shall Be Invited To Submit technical bids. The closing date for this opportunity is 28th April 2015.

Chevron - Provision of Machine Shop Services

Chevron invites interested and registered Nigerian companies to respond to the opportunity for the provision of machine shop services (onsite and offsite). The scope of services involves the provision of all skilled, qualified and certified personnel, supervision, services, transport, testing devices, equipment, tools, and each and every item of expense necessary for the rendering of machine shop services to company. Only tenderers who are registered with the NJQS Product/Category 3.05.23 (machine shop services), Category A shall be invited to submit technical bids. The closing date for this opportunity is 29th April 2015.

Chevron - Provision of Tubing Gravel Pack Services

Chevron invites interested and registered Nigerian companies to respond to the opportunity for the provision of through tubing gravel pack services. The scope of services involves the deployment of different sizes of through tubing sand control (TTSC) screens as needed, proppants placement and other TTSC Services. Only bidders who are registered with NJQS Product/Category A, B, C and D of 3.04.33 (gravel packing services) shall be invited to submit technical bids. The closing date for this opportunity is 30th April 2015.

SPDC - Provision of Onshore Survey Services

Shell Nigeria Exploration and Production Company Limited (SNEPCO) invites interested and registered Nigerian companies to respond to the opportunity for the provision of land and swamp survey services to support hydrocarbon exploration and production in the Niger Delta. The scope of services involves the provision of geodetic control surveys, topographical surveys, positioning of wells and rig moves, preliminary investigation for locations / facilities site and pipeline route selection optimisation and wells location, pipeline routes, and facilities surveys. Only Tenderers who are registered in the NJQS product/service categories shall be invited to submit technical bids. The closing date for this opportunity is 30th April 2015

Total - Provision of Catering Services

Total E & P Nigeria Limited invites interested and registered Nigerian companies to respond to the opportunity for the provision of catering services. The scope of services involves the supply, catering and stewarding of meals in accordance with the stipulated scope. Only Tenderers who are registered with relevant product/service categories shall be invited to submit technical bids. The closing date for this opportunity is 6th May 2015.