These agreements, totaling approximately US$200 million in value, give Ophir over 14 months of deepwater rig access over a three year period commencing Q1 2008. The agreements, concluded with ExxonMobil Corporation's subsidiary Esso Exploration Incorporated and Seadrill Offshore, relate to the provision of the ultra-deepwater dynamically positioned drillship West Polaris, and a further series of agreements with Esso and Larsen Oil & Gas Limited, on behalf of Venture Drilling A/S, for the provision of the dynamically positioned deepwater drillship Deep Venture.
Ophir is the Operator of 12 deepwater exploration licenses in Africa and is a participant in an additional two licenses. The precise timetable of the drilling program and the number of wells to be drilled will depend on initial drilling results and the ongoing analysis of seismic acquisition programs across Ophir's deepwater asset portfolio; however it is expected that the first drilling program will be in the Gulf of Guinea.
In addition to completing its initial drilling obligations and appraising any discoveries, the Company may also consider assignment of available rig slots from both programs to other Operators where this generates further opportunities for Ophir.
Deepwater Rig Share Agreements
Ophir has secured the use of the West Polaris for 295 days as part of a 36 month contract between Esso and Seadrill and the use of the Deep Venture for 135 days as part of an 18 month contract between ExxonMobil and Larsen. The Deep Venture will be transferred to Ophir for a continuous drilling program commencing early Q1 2008, while the West Polaris will be assigned to Ophir for 3 separate extended programs of approximately 100 days each commencing Q1 2009 and finishing in Q1 2011. Ophir has entered into agreements with Standard Bank under which Standard has issued Letters of Credit to secure Ophir's performance under the West Polaris agreements.
Under these arrangements, Ophir will, where practical, have access to ExxonMobil's global service agreements to ensure continuity of personnel on the rigs, safer operations and reduced procurement costs. Also, to ensure maximum efficiency and smooth transfer of operations, Esso, Seadrill, Larsen and Ophir will, wherever possible, establish common HSE and drilling procedures.
Commenting on the transactions Ophir's Managing Director, Dr Alan Stein, said;
"A global shortage of deepwater drilling rigs is causing a bottleneck for many companies involved in deepwater petroleum exploration. There appear to be more commitments to drill than there are rigs with which to drill. These agreements give Ophir the ability to go beyond its commitments in evaluating and appraising its extensive portfolio as well as potentially acquiring access to new opportunities by way of rig assignments. We now have the capacity to drill somewhere in the region of 12 to 15 deepwater wells over the next four years across a variety of plays and petroleum provinces, where each well has the potential to make a significant difference to the Company.
The collaborative arrangements with Exxon have assisted Ophir in building its own deepwater drilling capability and we are appreciative of the positive spirit in which these negotiations were concluded. We are also appreciative of the innovative financial instruments created by Standard Bank to support the Company in entering into these arrangements."
Commenting while reviewing the refit of the Deep Venture in Cape Town Ophir's Chairman, Mr. Tokyo Sexwale, said;
"This commitment to rig contracts, worth in excess of US$200 million, by Ophir is a signal of our determination and confidence. Ophir was born from a desire to create a major African energy company and these transactions take us a significant step further towards that goal."
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