Afren Completes Acquisition of Heritage Congo Limited
Afren has signed Heads of Agreement with Gulf Energy Resources for the acquisition of a five percent stake in the highly prospective onshore Cabinda Central License Block B ("Angola acquisition") and completion of the acquisition of Heritage Congo Limited announced in June 2006.
Completion of Acquisition of Heritage Congo Limited
--Afren has completed the acquisition of Heritage Congo Limited, giving the Company a 14% share of the highly prospective La Noumbi permit
--The La Noumbi permit lies adjacent to the world class M'Boundi field, which is currently producing over 50,000 bopd, and covers circa 2,830 km2 of highly prospective acreage
--The La Noumbi permit includes the existing Tie Tie discovery, which flowed at 1,689 bopd. Five prospects have been mapped on existing 2D seismic, including the 50-75mmbbl Doungou prospect
--The forward exploration program for La Noumbi includes 500km of seismic acquisition which is scheduled to be completed by January 2007. An exploration well to test the Doungou prospect is planned for early 2007, together with up to six contingent wells in 2007
--The consideration for Heritage Congo has been revised from US$28 million to US$21 million and the purchaser warrants reduced to 1,500,000, f ollowing the exercise of pre-emption rights on the Kouakouala A and Kouakouala B, C, D licenses by the partners. The Company believes that the revised consideration for the 14% stake in La Noumbi is favorable to Afren
Heads of Agreement for Cabinda Stake
--The Cabinda Central License Block B License (the "Block") is located in the Cabinda province and covers an area of 1,125 km2
--The Company has signed Heads of Agreement with Gulf Energy Resources for the acquisition of a carried 5% stake in the Block
--The Block contains highly prospective acreage with exploration potential at several stratigraphic levels
--The previous exploration history includes 32 wells, with several discoveries that found light oil, and 950km of 2D seismic
--The forward plan is to commence a 2D seismic program to gather 650km of data in 2007, followed by the re-commencement of exploration and appraisal drilling in 2008
--The license is operated by Devon Energy (30%) and other partners are Repsol (25%), Sonangol (20%) and Petrogal (20%)
Afren post acquisitions
--Afren has rapidly expanded since IPO in March 2005 to build a diversified portfolio across five countries; Nigeria, Sao Tome and Principe, Gabon and now Congo and Angola
--This follows the recent announcement appointing Dr Rilwanu Lukman as non-Executive Chairman and establishing the International Advisory Board comprising Brian Ward and Ennio Sganzerla, and John St. John as Strategic Financial Advisor to the Board.
--Afren has an active forward program, with intensive development and appraisal work on existing discoveries and an intensive exploration program targeting new prospects
--Nigeria - the Okoro 3 well is currently being drilled. The Global Santa Fe Adriatic VI drilling unit has been secured for a nine month program to develop the Okoro and Setu Fields commencing August 2007, targeting first oil in early 2008
--Gabon - an exploration well on Themis Marin, Q2 2007
--Congo - an exploration well on the Doungou prospect, early 2007
--Overall the Company remains on track to reach its target of 15-20,000 bopd by early 2008
Brian O'Cathain, Chief Executive, commented:
"I am delighted to announce that we have signed Heads of Agreement on the acquisition of GER's stake in the highly prospective onshore Cabinda Central License. Entry into Angola and Congo marks significant steps in the diversification and expansion of Afren's West African portfolio.
"The acquisition of Heritage Congo gives Afren a strategic entry into the Congo and a material share of the very exciting La Noumbi permit, which was the primary attraction of the acquisition with a number of identified high impact exploration prospects."
The Heads of Agreement establishes a foothold into Angola, a leading area for exploration in sub-Saharan Africa with 11.4 billion barrels of proved undeveloped reserves.
The Cabinda Central License Block B License ("the permit") is located in the Cabinda province and covers an area of 1,125km2. The Permit is operated by Devon Energy (30%) and other participants are Repsol (25%), Sonangol (20%) and Petrogal (20%). The GER stake is carried by Devon through the first US$18 million of expenditure.
The acreage is considered to be highly prospective with exploration potential at several stratigraphic levels. It is located on trend and adjacent to several discoveries, including one of Africa's largest onshore fields, the 300mmbbl M'Boundi development. M'Boundi, currently produces at over 50,000 bopd from the Vandji sandstone and the Vandji sand fairway extends south into Cabinda. The Cretaceous Vandji has been previously overlooked in the region, due to an historical focus on shallower reservoirs. This marks Afren's second focused announced acquisition targeting the Vandji sand fairway, following La Noumbi in Congo.
Thirty-two wells have been previously drilled, several of which found light oil. The wells were located, primarily for shallow reservoir targets, without the benefit of seismic data. A 950km 2D seismic data grid was acquired in 1971 that identified several attractive leads. Reprocessing of this data together with acquisition of new seismic and aeromagnetic data is expected to deliver a high quality exploration prospect portfolio.
Under the PSA, there are three exploration periods. The first, for a period of three years, includes five commitment and two contingent wells and the acquisition of 500km of 2D seismic. The forward plan is to commence a 2D seismic program to gather 650km of data in 2007, followed by the re-commencement of exploration and appraisal drilling in 2008.
Acquisition of Heritage Congo Limited
Afren also announces that it has completed the acquisition of Heritage Congo Limited, providing the Company a 14% share of the La Noumbi permit. Heritage Congo Limited was the wholly owned subsidiary of Heritage Oil Corporation, whose common shares trade on the Toronto Stock Exchange under the symbol HOC. This follows exercise of pre-emption rights by Maurel et Prom and Burren over the Kouakouala A and Kouakouala B,C,D Joint Operating Agreements. The cash consideration for the acquisition of Heritage Congo Limited has been revised from US$28 million to US$21 million and the purchaser warrants reduced to 1,500,000.
The La Noumbi permit covers 2,830 km2 and lies adjacent to - and on trend with - the world class M'Boundi field. The acreage is under explored and no drilling has taken place since 1992. The acreage contains one ready to drill prospect, Doungou (50-75 mmbbls), which is planned to be drilled early in 2007. The permit also includes an existing discovery; the Tie-Tie well which was discovered in 1982 and flowed 1,689 bopd. A new 500km 2D seismic program is underway, targeted at existing leads and prospects, expected to result in additional exploration drilling in early 2007. In addition to an exploration well on the Doungou prospect, six contingent wells are under consideration for drilling in 2007. Under the terms of the Production Sharing Contract, three firm and three contingent wells are required. The operator is Maurel et Prom (48.5%) and Burren (37.5%) is a partner.
The transaction marked Afren's first targeted acquisition within the Vandji sand
fairway that extents north into Gabon and south into Angola.
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