Sovereign Signs Nexen to Oriental's OML 115 Offshore Nigeria

Sovereign Oil & Gas has received notice of approval of the government of Nigeria for the farmin of a wholly owned subsidiary of Nexen Inc. of Canada into Oil Mining Lease (OML) 115 offshore Nigeria.

OML 115 is owned by Oriental Energy Resources Limited, a leading Nigerian oil independent. Sovereign is Technical Advisor to the company.

OML 115 covers around 61,000 acres located in shallow water 35 miles offshore Nigeria's prolific southeastern producing area. The primary reservoir objective is the Qua Iboe sands that have accumulated multi billion-barrel reserves of high quality crude oil in nearby fields offsetting OML 115.

Sovereign's President Joseph M. Bruso, Jr. said, "OML 115 is located in one of the richest oil tracts in the world. The block lies at the center of a 1.2 million-acre tract with over 7 billion barrels of proved oil reserves. The area produces over one million barrels of oil per day."

Under the terms of the farmin deal, Nexen will have a 40% participating interest, assume the role as Technical Advisor to Oriental, and fund 100% of the costs of a new 3D seismic program and the drilling of up to three exploration wells. Oriental retains a 60% participating interest, and will serve as Operator.

Renewed interest in OML 115 began two years ago when Sovereign commenced mapping of OML 115's existing 2D and 3D seismic data. This initial exploration effort revealed new large-potential oil reserves within the Qua Iboe interval in subsurface traps located in around 150 feet of water. "Based on Sovereign's regional experience and our latest 3D seismic mapping, we believe several hundred million barrels of new oil reserves are likely on OML 115," said Bruso.

"Sovereign's technical staff discovered, named, and helped develop the nearby super giant Zafiro Field with over 1.2 billion barrels of reserves, and still growing," said Bruso, "So, we know the look and feel of what works geologically in this part of offshore West Africa." Sovereign also assisted Oriental with initialing farmin negotiations for the adjacent Okwok Field in OML 67, owned by the Nigerian National Petroleum Corporation and ExxonMobil.

"OML 115 will be a low cost project, with these Qua Iboe reservoirs located offshore in shallow water at easy drilling depths," added Bruso. "We are pleased to have Nexen join the project with their experienced offshore Nigerian operating team and their plans for fast tracking OML 115 to early production."

The block-wide new 3D seismic program will begin in OML 115 as soon as possible, subject to seismic vessel availability, with one or more exploration wells planned in 2004.