Ophir, the upstream African oil and gas resource company announces the Amendment and expansion of the Block R Production Sharing Contract (PSC) in Equatorial Guinea.
Highlights:
Following this block extension, the revised drilling campaign is now expected to include the Fortuna West, the Volturnas and the Tonel prospects and the likelihood of reaching the commerciality threshold of 2.5Tcf on Block R has risen to 80%.
The PSC Amendment has been entered into by the Ministry of Mines, Industry and Energy (MMIE), Ophir and its partner the National Oil Company of Equatorial Guinea, la Compania Nacional de Petroleos de Guinea Ecuatorial (GEPetrol). The primary purpose of the Amendment is to expand the area covered by the Block R PSC to include unlicensed acreage north-west of the original contract area to include the blocks designated as C-9, D-8, D-9 and D-10. These blocks were previously relinquished from Block C, which is currently operated by Repsol.
The Estrella de Mar-1 and Oreja Marina-1 gas discoveries, which lie within the expansion acreage, were drilled by ExxonMobil in February 2001 and June 2002 respectively. These discoveries are estimated to have combined resources in excess of 250Bcf. The discoveries are analogous to Ophir’s 2008 Lykos-1 discovery.
The license award represents an expansion of the Block R acreage by c 46% to include these additional gas resources and also 15 additional 3D defined prospects. Based upon a review of previous work and a preliminary evaluation the Company estimates the mid-case unrisked prospective resource potential within the expansion area to be in the region of 3Tcf. The highest ranked of the new prospects is Tonel which is estimated to have a mid-case prospective resource of 450Bcf.
Ophir has committed to accelerate exploration activity in the enlarged area through the drilling of two further commitment wells under the Block R PSC. These wells will form part of a proposed 3 to 4 well drilling campaign which is planned to commence in 1H 2012 and which is now expected to include the Fortuna West appraisal/exploration well and the Volturnas and Tonel prospects. Ophir is now in negotiations to secure a rig as early as possible in 2012.
The Company estimates that a minimum resource volume of 2.5Tcf is required to undertake commercialisation of gas from Block R through expanded LNG facilities on Bioko Island. Based on Ophir’s previous discoveries in the Block, the Company had estimated that the likelihood of exceeding the commerciality threshold from the next three well campaign in the original Block R area was c 58%. Taking the new acreage into consideration the Company now estimates the likelihood of exceeding the commerciality threshold to be c 80%.
In March 2011, the MMIE announced the signature of a Memorandum of Understanding (MoU) relating to the commercial structure of the LNG Train 2 Integrated Project in Equatorial Guinea. This MoU was signed by the MMIE, SONAGAS GE (the National Gas Company of Equatorial Guinea), the partners of Blocks O & I (Noble Energy, GEPetrol, Glencore, Atlas Petroleum and Osbourne Resources Ltd.), the partners of Block R (Ophir and GEPetrol), the shareholders of 3G Holding Ltd (Union Fenosa Gas, GALP Energia and SONAGAS GE) and the partners of EGLNG Holding Ltd. (Marathon GE, Mitsui & Co. Ltd and Marubeni Gas Development Co. Ltd). It is intended that this MoU will form the framework for a second train expansion of the existing LNG facility on Bioko Island. Ophir’s 1H 2012 drilling campaign on the expanded Block R is designed to prove up the 2.5Tcf required for Ophir’s feedstock contribution to the second train.
Dr Nick Cooper, CEO of Ophir , commented:
“We are very pleased to announce this block expansion, which has significantly increased the chances of the next drilling campaign meeting or exceeding the minimum volumes required to underpin a commercial LNG project supplied from Block R.
“Ophir is delighted to re-affirm its commitment to Equatorial Guinea and we are now working to secure a rig and to commence the drilling campaign as early as possible in 2012.”
[mappress] Source:Ophir Energy , October 31, 2011