Canadian Overseas Petroleum (LON:COPL, CVE:XOP) has revealed that its joint venture with Shoreline Energy is set to acquire near-term production assets in Nigeria.
The junior oil company, which also has an exploration venture with Exxon offshore Liberia, has been working with Shoreline to diversify its portfolio and together they are focussing on opportunities in sub-Saharan Africa.
It said today, in a statement, that significant progress had been made in recent months. Notably representatives of both COPL and Shoreline visited Nigeria last week to meet with government agencies seeking approval for the deal to close.
The company said it “expects that the transaction will be completed within the shortest possible time” and the details will be disclosed once it has been approved.
It did reveal, however, that the joint venture company ShoreCan is expected to own 80% of the project, which is described as being “an oil appraisal/development project offering near term oil production, as well as significant future exploration upside.”
Arthur Millholland, COPL chief executive, said: “This is a very high quality asset that is attractive at the current oil price environment which will add significant value to our shareholders."
Millholland added that the pending acquisition was a step towards COPL becoming a balanced and growing exploration and production company.
“We'd like to reassure shareholders that despite the delays in Liberia and continued oil price weakness, the quality of sub-Saharan African light crude oil coupled with dramatic operational cost reductions, clearly make our strategy a sound one and beneficial for COPL and Shoreline shareholders,” he said.
COPL last week told investors that Exxon’s proposed exploration well, offshore Liberia, had been confirmed in the American major’s budget for 2016. The well, Mesurado-1, which had previously been delayed amid last year’s Ebola crisis in West Africa, is scheduled for late 2016 to early 2017.
Mesurado’s primary goal is to prove commercial volumes of hydrocarbons. It will be in a deep-water location and will target Cretaceous Santonian-age reservoirs. Exxon budgets the exploration at a cost of US$120mln, though COPL’s 17% interest in the project is ‘carried’ by the American group.
COPL shares in London advanced 0.25p, around 12%, to trade at 2.38p each.