Canadian Overseas Petroleum (LON:COPL) owns stake in offshore Nigeria field OPL 226
Just received a US$7mln performance bond to move the development forward
Wants to drill a four-well programme that will cost US$120mln
Talks underway with potential partners
How is it doing
At the end of last year, the state-run National Nigerian Petroleum Corporation (NNPC) granted conditional approval for a two-year extension of the phase 1 production sharing contract (PSC) subject to certain conditions, including the submission of a performance bond of US$7mln.
COPL expects the performance bond to be in place in the coming weeks, at which point “activities on OPL 226 can be commenced in earnest”.
The company needs to arrange project finance of US$100mln and equity of a further US$20mln, which in turn will trigger a US$30-50mln offtake deal agreed with Mauritius Commercial Bank and commodities trading group Trafigura.
In terms of the US$100mln project finance that is required, COPL repeated today that it is in “late-stage discussions” with an offshore oil services group about securing the money.
In January, COPL had said it hoped to complete financing for an appraisal drilling programme at OPL226 in Nigeria by the middle of 2019 with talks underway with three large groups that can provide both oil services and finance.
Subject to finance, appraisal drilling on OPL 226 is scheduled for mid-year, said COPL, with the intention to bring four wells onstream at a forecast rate of 6-10,000 barrels per day by the end of 2020.
Arthur Millholland, COPL’s chief executive, said: “With the potential for significant near-term production at OPL 226, we are focused on ensuring this comes on stream as soon as possible, with the first production well scheduled to commence drilling by mid-2019, assuming all steps of the process are in order.”
COPL’s 50% owned subsidiary ShoreCan has an 80% interest in the vehicle that holds the OPL 226 licence.
Elsewhere, COPL is looking to agree terms for a production sharing contract governing onshore Block PT5-B on the Mozambique coastal plain.
What the boss says: Arthur Millholland, chief executive
“The attractiveness of working offshore Nigeria is that its home to some of the best reservoirs in the world, so the economics are very good."
Receipt of performance bond from Nigerian bank
Appraisal work starts at OPL 226
Finance partner is found and terms agreed
Company moves into production