Sovereign, acting in its capacity as technical advisor to Oriental, conceived and negotiated the Ebok farm-in on Oriental's behalf as a means for Oriental to obtain compensation for its losses resulting from the 2000 maritime boundary treaty between Nigeria and Equatorial Guinea. This treaty, which formalized the maritime boundary between the two countries with respect to oil drilling and development rights of the giant Zafiro Field, also had the effect of ceding the southern 20% of Oriental's OML 115 to Equatorial Guinea. ExxonMobil operates Block B, the license on the Equatorial Guinea side, and was thus a beneficiary of the highly prospective OML 115 acreage lost by Oriental. On the Nigerian side of the boundary, Oriental's OML 115 is surrounded by OML 67, acreage owned by ExxonMobil and NNPC that includes the two undeveloped oil fields named Okwok and Ebok. Sovereign previously announced Oriental's successful farm-in into the Okwok Field on May 9, 2006.
Nigeria's Petroleum Amendment Act of 1996 on Marginal Fields empowers the government to designate as a Marginal Field any oil fields that are not developed within 10 years of discovery and to farm out such fields to investors and local entrepreneurs. In 2001 the Nigerian government granted Oriental exclusive negotiating rights to farm-in to the Okwok and Ebok fields from Mobil as compensation for its losses to ExxonMobil on the Equatorial Guinea side of the border.
Under the terms of the Farm-out Agreement (FOA) Oriental executed with Mobil and NNPC on May 15, 2007 and May 25, 2007 respectively, Oriental, a leading Nigerian oil independent, is now the Operator of the Ebok Field, an offshore oil field originally discovered and partially appraised in 1968 by Mobil and NNPC. Mobil voluntarily contributed the Ebok field to Nigeria's Marginal Field Program that was established by the federal government to encourage more Nigerian company participation in the oil and gas sector.
Oriental is presently seeking a qualified Technical Advisor who, pursuant to a Joint Venture Agreement, will own a 40% participation interest in the Ebok Field when approved by the Nigerian government. Sovereign is managing the farmout of this interest on Oriental's behalf, and recently opened a data room in its Houston office in Greenway Plaza, where qualified candidates may review the complete Ebok Field data package, including state of the art reserves mapping and commercial analysis of this previously discovered, undeveloped oil field.
Oriental was materially assisted by Sovereign Oil & Gas Company II, LLC of Houston, Texas, in obtaining the farm-out from Mobil-NNPC for both the Okwok and Ebok Fields. Oriental and Sovereign have now farmed out two fields from Mobil, the Okwok Field (May 9, 2006) and the Ebok Field (May 25, 2007), under a unique commercial formula.
Sovereign's Chairman, Joseph Bruso, said, "Sovereign is pleased to have played a leading role in the conception and execution of this landmark commercial agreement between Oriental, Mobil, and NNPC. For the first time, we see a truly win-win commercial agreement that allows all of the parties, including government, to reap the economic benefits of accelerated development of a substantial fallow oil field under Nigeria's indigenous upstream ownership program. Based on the existing guidelines for the farmout of marginal fields, the Ebok deal establishes a template for the rapid commercialization of the large number of undeveloped oil discoveries in Nigeria by qualified Nigerian independents".
Alhaji (Dr.) Mohammed Indimi, Executive Chairman of Oriental, said, "We are pleased to have concluded the Ebok farm-out with Mobil and NNPC, and we are taking appropriate steps to move forward aggressively with our plans to fast track Ebok to early oil production. The Ebok Field appraisal and development program has obvious synergies with our development of the adjacent Okwok Field, and we are presently showing the Ebok project to qualified companies in the Houston data room operated by Oriental's technical advisor, Sovereign Oil & Gas Company."
Oriental plans to drill up to four appraisal wells in the Ebok Field commencing later this year, to confirm the commercial potential of the field. A total of three wells were previously drilled in Ebok Field, all three by Mobil/NNPC between 1968 and 1970, in water depths averaging 150 ft. (46m). The deepest depth reached was 5,298 ft. (1,615m). Of these prior wells, two found thick productive zones, with one well encountering a total of 271 ft. (83m) of net oil pay in four sands between 2,600 ft. (800m) and 3,600 ft. (1,100m), but none of the zones were production tested. The Ebok Field is defined by these wells and by good quality 1992 3D seismic data, which covers both the Ebok and Okwok Fields. Sidewall core samples recovered from Ebok have permeabilities in excess of one Darcy. Despite the shallow depths of the reservoirs, light crude oil of up to 37 degree API gravity was encountered in stratigraphically equivalent reservoirs at nearby Okwok Field, where the reservoirs are somewhat over pressured. A successful Ebok appraisal program by Oriental will be followed by field development operations. First commercial oil production from Ebok could commence as early as 2009.
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