Exile Resources Takes Stake in Nigerian Oilfield
Exile Resources Inc. has agreed to acquire a direct participating interest in an existing oil and gas discovery in Nigeria.
Exile has signed a Farm In Agreement to acquire a 40% participating interest in the Akepo discovery in the Niger Delta, from Sogenal Ltd, an indigenous Nigerian oil company.
Akepo is a discovered, but undeveloped oilfield, located in shallow water, near existing developed oil fields and export infrastructure, and has been estimated by an independent consultant to contain prospective resources in place of some 17 million barrels of oil and some 80 billon cubic feet of gas, with potential upside from within the existing structure and from additional target structures identified within the license area.
The Akepo-1 discovery well logged over 100 feet of net oil pay and over 50 feet of net gas pay in a number of stacked sands. The discovery well was sidetracked as Akepo-1ST, and this well encountered over 150 feet of net oil pay in total, together with over 110 feet of net gas pay.
Stephen Brown, President and CEO of Exile, stated:
"The acquisition of Akepo, an already discovered oil field, is a major milestone for the Company in the implementation of our strategy. Akepo fits the parameters presented to investors in the second quarter of 2006 and its development is expected to deliver oil production during 2008 and, importantly for our first oil project in Nigeria, there is upside potential within the license. In parallel with the execution of the Akepo project itself, Exile will continue to pursue additional development opportunities and exploration acreage in Nigeria and across West Africa in furtherance of its goal to build a reserve base of over 10 million barrels of oil net to Exile by the end of 2007. The Akepo agreements that have been executed are a valuable template from which to negotiate future Nigerian deals."
Otunba Funso Lawal, Chairman of Sogenal Ltd, stated:
"We are quite delighted that this partnership represents a significant milestone for both Sogenal and Exile. The development of the Akepo field fits perfectly into Sogenal's plan of early production by the last quarter of 2008. The upside potential of the field could result in production volumes in excess of initial estimates. With this development, Sogenal can now proceed with its strategy of developing a well balanced portfolio of oil and gas assets for future growth. This would place the company at the forefront of the indigenous oil and gas business in Nigeria."
Exile has entered into definitive agreements with Sogenal Ltd., an indigenous Nigerian oil and gas company, to acquire a 40% participating interest, and up to an 80% economic interest, in the Akepo license and to engage in the appraisal and development of the Akepo oilfield. The Akepo Farm In Agreement and Joint Operating Agreement are subject to the approval of the Government of Nigeria, NNPC and Chevron, the holders of license OML90, and the TSX Venture Exchange.
Akepo lies in 27 feet of water, near existing oil field developments and established export infrastructure, within OML 90 in the offshore Niger Delta. Discovered in 1993 by Chevron, the Akepo field was first encountered by the Akepo-1 well and appraised by its sidetrack, Akepo-1ST. Neither well was tested, but nearby wells in analogous reservoirs have produced at rates of between 2,000 and 4,000 bbls of oil per day from individual sands. The Akepo license also has the benefit of a 3D seismic survey that provides a robust dataset to enable evaluation of the Akepo oilfield reserve base and to identify further prospectivity on the license.
Sogenal was awarded 100% of the Akepo field in 2004 by the Government of Nigeria as part of the marginal field licensing round initiated in 2002. The license term expires in 2009 or upon approved petroleum operations having ceased, whichever is the later. The suite of formal agreements entered into by both Exile and Sogenal define the commercial terms under which Exile will engage with Sogenal in the development of Akepo. Under these agreements, for a consideration of US$2.1 million, Exile will acquire a 40% participating interest in the license and will be responsible for paying both Exile's and Sogenal's participating interest shares of the capital costs required to develop the field. Exile will be able to recover Sogenal's carried costs via an allocation of 80% of the oil and gas produced from the field. After these costs have been recovered, Exile will be allocated a 70% interest in production until 7.5 mmbbls have been produced and thereafter a 50% interest until 10 mmbbls have been produced, whereupon Exile's share will revert to a 40% participating interest. Exile will also be responsible for certain further production bonuses related to aggregate production targets from the field.
The Akepo structure is estimated by Exile's technical consultant to contain prospective resources of some 17 million barrels of oil in place and some 80 bcf of gas in place, with potential upside in the Akepo structure and from further structures identified within the license area. The initial work program will entail reservoir studies, appraisal and development planning. An appraisal well is planned to be drilled on the field prior to a development commitment. The Company expects to be ready to drill the appraisal well during 2007, subject to rig availability. Initial capital expenditure required to develop the field is currently estimated at less than US$50 million, inclusive of the appraisal well.
Acquisition of Akepo will contribute significantly to Exile's previously announced reserve and production strategy. Exile expects production from Akepo to begin during 2008 and, following an initial assessment of the expected project schedule, Exile's production target has now been reset to 3,000 to 5,000 boe per day net to Exile by year end 2008. The Company continues to target building a reserve base of over 10 million barrels net to Exile by the end of 2007 and to this end is in active discussions to participate in further Niger Delta discoveries and other opportunities in West Africa.
Exile Resources Inc. is an oil and gas exploration company with interests in the Akepo Oil Field in the shallow water Niger Delta, Nigeria, and in the Brazeau River Project, located 160 km south west of Edmonton, Alberta. The Company is also pursuing additional oil and gas, exploration and development opportunities in Africa. Exile Resources Inc. has 35,298,223 issued and outstanding common shares.
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