The agreements call for the Participants to pay Syntroleum a signing bonus and to pay a promoted cost to drill and test one appraisal well in the Aje discovery and one option well in order to earn 67.5% of Syntroleum's participating interest in OML 113. Additionally, upon commencement of commercial production, the Participants shall pay a development bonus to Syntroleum.
"These companies will be an outstanding team for Syntroleum," stated Jack Holmes, President and Chief Executive Officer. "Lundin is experienced in the type of oil and gas field we are beginning to appraise at Aje. Challenger, through its affiliate, Applied Drilling Technology Inc. (ADTI), has unique drilling and service capabilities and collectively the Participants are able to move quickly and efficiently in the implementation of field development plans. Furthermore, the Participants and Syntroleum expect that Aje, a previously discovered oil and gas accumulation, will become an ideal application for Syntroleum's marine based GTL technology."
Scheduling of the first appraisal well (Aje-3) will be finalized following the formal assignment of interest by the government of Nigeria to Syntroleum and the Participants. Drilling is expected to begin the second or third quarter of 2005. Syntroleum believes the Aje-3 well has the potential to confirm large commercially viable crude oil and condensate volumes as well as natural gas reserves sufficient for Syntroleum's marine GTL installation.
The OML 113 license covers approximately 454,000 acres located off western Nigeria near the border with Benin.
Syntroleum Corporation owns a proprietary GTL process for converting natural gas or synthesis gas into ultra clean synthetic liquid hydrocarbons. The company plans to use its technology, as well as other third party gas processing technologies, to develop and participate in gas monetization projects in a number of global locations.
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