The Board of Afren announces that it has signed a Memorandum of Understanding with Sogenal, an indigenous Nigerian oil and gas company, to participate in the development of the Akepo field in OML 90, offshore Nigeria. Akepo is a proven undeveloped oilfield located in the shallow water offshore Niger Delta. The Akepo field was discovered by Chevron's Akepo No 1 well in 1993, logging 107 feet of net oil pay, and is expected to contain approximately 10 - 20 million barrels of prospective recoverable oil resources. The discovery well was sidetracked and confirmed over 150 foot of net oil pay at a number of separate levels. Sogenal was awarded 100% of the Akepo Field by the Government of Nigeria in the 2003 marginal field licensing round.
The Akepo Field is Afren's second partnership agreement signed this year as part of its strategy to participate in the development of clusters of proven undeveloped fields, with low cost development options. On 15 August 2005 Afren announced it had signed a Financing and Production Sharing Agreement with Bicta Energy and Management Systems Ltd to jointly develop the Ogedeh Field, also in OML 90. Both the Ogedeh and the Akepo field are fully covered by 3D seismic.
The Akepo Field is directly adjacent to the Ogedeh Field, allowing Afren and partners to benefit from economies of scale in the development of both fields. Afren expects development drilling to commence on both Akepo and Ogedeh in Q2 2006, and is in advanced discussions with a number of rig contractors to this end. The two fields are located approximately 12 kms from nearby production infrastructure linked directly to the oil export terminal at Forcados. The fields are expected to produce at a combined initial rate in excess of 10,000 barrels per day on full field development.
The memorandum of understanding signed between Afren and Sogenal defines the commercial terms under which Afren will participate with Sogenal in the development of Akepo. Under the terms of this agreement, Afren will be responsible for paying all costs for the development of the field, and will be able to recover those costs via an allocation of oil and gas produced from the field. After all costs have been recovered, Afren and Sogenal will share in the production in accordance with their working interests.
Brian O'Cathain, Chief Executive of Afren commented:
This transaction is in line with our stated strategy of leveraging off strategic relationships to gain access to attractive deal flow in areas such as the Niger delta region. Akepo is one of a number of deals we are evaluating which will further develop Afren as a leading African exploration and production company".
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