Addax Adds Acreage, Deepwater Working Interest to 3Q Portfolio

The third quarter of 2008 continued an active new business program for Addax Petroleum with the addition of two new exploration license areas to the Corporation's property portfolio and the increase of the Corporation's working interest in a deepwater exploration license area. In addition, Addax Petroleum received Federal Government of Nigeria approval for an integrated gas utilization initiative which could lead to the development and monetization of the Corporation’s considerable gas resources in Nigeria.

New business highlights for the third quarter of 2008 include the following:


Addax Petroleum acquired a 50 per cent interest in, and operatorship of, the Gryphon Marin license area. The Gryphon Marin license area covers a gross area of 2,409,200 acres (9,750 km2) and is immediately north of Addax Petroleum's Etame Marin license, offshore Gabon. As part of the acquisition, Addax Petroleum is inheriting a full suite of seismic data including approximately 3,900 km2 of modern 3D seismic and 2,100 km of 2D seismic.

Addax Petroleum's interest in Gryphon Marin is subject to two separate options held by a third party which could reduce Addax Petroleum’s interest to 23.5 per cent for approximately 44 per cent of the gross license area. The Gryphon Marin license area is also subject to a 10 per cent back-in right held by the Government of Gabon for any development areas. The Gryphon Marin license area is in an exploration period ending in November 2009 and carries a commitment to drill two wells.

Kurdistan Region of Iraq

Addax Petroleum acquired a 33.33 per cent interest in the Sangaw North Production Sharing Contract ("PSC"), effective September 2008. The Sangaw North license area is operated by Sterling Energy plc and is located approximately 80 kilometers southeast of Addax Petroleum’s Taq Taq license. The Sangaw North PSC is subject to an assignment to the Korean National Oil Corporation which, when completed, will reduce Addax Petroleum's interest to 26.67 per cent.

In addition, the Kurdistan Regional Government has the right to require that at a future date a government nominated entity be assigned 25 per cent which, if exercised, will further reduce Addax Petroleum's interest to 20 per cent. Under the terms of the acquisition, the consideration from Addax Petroleum comprises the reimbursement of Sterling's past costs as well as the funding of seismic acquisition and the drilling of an exploration well.

Joint Development Zone ("JDZ")

Addax Petroleum was awarded an additional 7.2 per cent participating interest in Block 4 of the JDZ. The award was made as a result of arbitration proceedings by a panel of the London Court of International Arbitration which confirmed that Addax Petroleum is entitled to the 7.2 per cent additional interest for no additional monetary consideration beyond the $18 million previously paid by Addax Petroleum. The award increases Addax Petroleum’s interest in Block 4 to 45.5 per cent.

Gulf of Guinea Shallow Water (Nigeria and Cameroon)

Addax Petroleum announced, together with its partners Chrome Oil Services Limited and Korea Gas Corporation, that it has received the approval from the Federal Government of Nigeria for its proposed implementation of an integrated gas utilization project in Nigeria. The integrated gas utilization project is intended to include the exploration and development of gas fields in Nigeria, including Addax Petroleum's OML137, and to secure the gas reserves necessary to commercialize a new liquefied natural gas production facility of up to 10 million tonnes per annum. It is also expected to provide domestic power generation capacity along with the provision of feedstock for the development of petrochemical facilities.

Selected Exploration and Appraisal Highlights

During the third quarter of 2008, Addax Petroleum continued to progress the exploration program within its property portfolio through a seismic acquisition campaign onshore Gabon and Cameroon, appraisal work in the Kurdistan Region of Iraq and preparation work for exploration wells to be spudded in the fourth quarter.

Exploration and appraisal highlights for the third quarter of 2008 include the following:

Gulf of Guinea Shallow Water (Nigeria and Cameroon)

  • In the Iroko license area, Addax Petroleum has continued analysis on the core and fluid samples from the exploration well drilled in the second quarter of 2008. In addition, 3D seismic was acquired in the third quarter of 2008 and is currently being processed;
  • Addax Petroleum is planning to enter the next exploration period in the Ngosso license, as the current period will expire in the first quarter of 2009. This next exploration period includes a commitment to drill one exploration well and to acquire additional 3D seismic data on the prospective northern part of the license area. The seismic acquisition campaign is planned to commence in the fourth quarter of 2008 and it is anticipated to be completed in the first quarter of 2009; and,
  • The Corporation continued site preparation for the Okaka exploration well and the Adanga North Graben exploration well in the OML124 and OML123 license areas, respectively.


  • Addax Petroleum completed a 2D seismic acquisition campaign on the Maghena license area and commenced a 2D seismic acquisition on the Epaemeno license which is expected to be completed in the fourth quarter of 2008. In addition, ongoing seismic interpretation and processing continues on the Remboue and Maghena license areas; and,
  • The Corporation continued site preparation for the Andok exploration well in the Maghena license area.

Kurdistan Region of Iraq

  • Through the Taq Taq Operating Company ("TTOPCO"), a joint venture between Addax Petroleum and Genel Enerji A.., Addax Petroleum imported a second, larger drilling rig (Kurdistan-1) and commenced the drilling of the TT-10 appraisal well in the third quarter of 2008;
  • Since the end of the third quarter of 2008, the Corporation also announced the successful appraisal of the Eocene Pila Spi formation in the Taq Taq field with the TT-11 well. The TT-11 well was spudded in early September 2008 and reached a total depth of 1,000 metres in early October 2008 encountering a gross oil column of 52 metres with a flow test of 470 bbl/d; and,
  • There has also been ongoing 3D seismic interpretation and extensive core analysis studies for the Taq Taq field as well as site preparation for the drilling of the Kewa Chirmila exploration well during the third quarter of 2008.

Gulf of Guinea Deep Water (Nigeria and JDZ)

  • During the third quarter of 2008, Addax Petroleum continued to conduct technical studies evaluating the exploration prospect drilling locations of its deep water licenses.

Selected Operational Highlights

Average gross working interest oil production in the third quarter of 2008 was 131,320 barrels per day (bbl/d) representing an increase of approximately 2 per cent over the 2007 average production of 128,160 bbl/d. Average oil production in the third quarter of 2008 included 103,630 bbl/d from Nigeria and 27,690 bbl/d from Gabon compared to a 2007 third quarter average production level of 104,510 bbl/d and 23,650 bbl/d, respectively.

Development project highlights in the third quarter of 2008 include:


  • drilled five successful development wells which included two oil production and two appraisal wells in OML123 and one oil production well in OML126;
  • placed a total of two new wells on production in the quarter, representing one of the five development wells drilled in the quarter and one drilled in a previous quarter;
  • performed three workovers in OML124;
  • approximately 8,000 bbl/d was shut-in at Oron West South (OML123) due to facility constraints associated with contractor delays in the installation of new pipelines. Partial production from Oron West South commenced early in the fourth quarter of 2008; and
  • continued preparation of the Kita Marine and Antan field development plans.


  • drilled six successful development wells onshore of which four were oil production wells in the Addax Petroleum operated Tsiengui field in the Maghena license area and two were oil production wells in the Tsiengui West field in the Awoun license area;
  • placed a total of four new wells on production in the Tsiengui field in the quarter of which three were drilled in the quarter and one was drilled in the previous quarter;
  • three wells were put on gas lift in conjunction with the start of injection into the gas cap for pressure support in the Tsengui field. While production from the Tsiengui field has been somewhat lower than expected, new wells brought on production are expected to offset the decline from existing producers;
  • the third-party operator of the Awoun license continues with the development of the Koula field with production start-up expected towards mid 2009; and,
  • continued ongoing surface facilities development at the onshore Addax Petroleum operated Tsiengui and Obangue fields, the onshore third party operated Koula field, the offshore third party operated Ebouri field and continued with the extension of the Corporation’s onshore oil export pipeline system.

Kurdistan Region of Iraq

  • an early production system has been installed and commissioned, and TTOPCO is targeting to commence commercial oil production attributable to Addax Petroleum’s working interest in the fourth quarter of 2008; and,
  • existing production facilities are being expanded in the fourth quarter of 2008 with a further capacity increase planned in 2009.

Operating netbacks in the third quarter of 2008 increased 50 per cent to $82.43/bbl compared to $54.94/bbl in the third quarter of 2007. Unit operating expenses in the third quarter of 2008 increased to $8.12/bbl, an increase of 29 per cent over the 2007 level of $6.29/bbl, due to cost inflation pressures for the provision of services, an increase in the number of well workovers and security related costs in Nigeria, an increase in personnel related costs to support the growing operations in Gabon and local currency appreciation relative to the US dollar.


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