February 7, 2012
The Exchange was notified that, Transnational Corporation of Nigeria Plc., (Transcorp), SacOil Holdings Limited (SacOil), and Energy Equity Resources (EER) have agreed on revise the terms for their partnership in Transcorp’s Oil Processing License 281 (OPL 281) in Nigeria.
Initiated by Transcorp, the revised terms are as a result of a change of control in Transcorp. In conformance with the change, Transcorp will take full responsibility for the operation of the block in its bid to become a leading Nigerian indigenous oil & gas upstream company with production.
“The revised agreement is in line with Transcorp’s vision of building a pan-African energy business with strong indigenous operational capabilities; Transcorp Plc. is excited by this development and is now poised to lead the process of bringing the asset to production.”
Consequently, Transcorp has revised the tranches for the fees in OPL 281 for SacOil and its technical joint venture partner, Energy Equity Resources („EER‟). SacOil paid $12.5 million towards the Signature Bonus on February 28, 2011, and $12m now becomes due once the remaining conditions precedent to the farm-in agreement have been met. These conditions include perfection of title and all the necessary Nigerian government and Nigerian National Petroleum Company (NNPC) approvals in relation to the license. By this revision also, EER‟s 50 per cent portion of the fees will be carried by SacOil as an interest bearing loan to EER to be repaid from EER‟s entitlement to production in OPL 281.
Transcorp will remain the operator of OPL 281 and will pay 60 per cent of the costs to first production. In the previous agreement, SacOil and EER carried 100 per cent of the costs. Transcorp will also post the performance bond to the Nigerian government.
Transcorp is also pleased with the revised terms as we will no longer be required to provide Transcorp with carry-on costs from the point of entry to first oil,” said Robin Vela, Chief Executive Officer, SacOil. “All costs are now carried in proportion to the equity owned by Transcorp, EER and SacOil. SacOil and EER will be actively involved in the processes through the Operations and Management Committees.”
According to the production sharing contract (“PSC”) to be executed by the parties, a work program budget of $15 million is estimated for the first phase of the exploration of OPL 281 and involves the acquisition of some 100 sq. km of 3D seismic data across the block and the drilling of at least one well. A Competent Person’s Report issued by reserves auditing firm, AGR-TRACS International Limited, has attributed a gross unrisked contingent resource of approximately 100MMboe, with additional potential in two further prospects and deeper zones.
According to the Chief Executive Officer, of EER, “The revised commercial terms reduces its CAPEX exposure whilst improving its rate of return in the project. Furthermore, EER has a key role to play in supporting Transcorp to bring the asset to production.”
Transnational Corporation of Nigeria Plc. (Transcorp), a company quoted on the Nigerian Stock Exchange, is a diversified conglomerate with strategic investments and core interests in the Hospitality, Agro-business and Energy sectors. Some of its more notable assets include OPL 281; Transcorp Hilton Hotel, Abuja; Transcorp Metropolitan Hotel, Calabar; and Teragro, the agribusiness subsidiary operating a fruit juice concentrate plant in Benue State, Nigeria.
SacOil is a South African-based JSE- and AIM-listed Exploration & Production Company focused exclusively on Operations in Africa, where it has a competitive advantage at the point of entry. To date, it has operations in the DRC (and has since partnered with Total), Nigeria and South Africa and continues to evaluate a number of opportunities to secure new value accretive acreage in other established and prolific African hydrocarbon basins.
Energy Equity Resources Limited (EER) is an established Oil & Gas Exploration and Production company headquartered in London with an operating office in Lagos and operations and assets in Nigeria. EER has interests in several assets in Nigeria and the Nigeria/ Sao Tome Joint Development Zone. EER has a unique mixture of private Nigerian, International and British institutional shareholders.
About OPL 281
OPL 281 is an onshore block covering an area of 138km² and is located in the western delta region of Nigeria, 25 kilometers away from the Forcados Crude Export Terminal. From 1967 to 1970, two discovery wells were drilled. The block was reinstated to Transcorp in April 2011. Current equity ownership is Transcorp 60 per cent, EER 20 per cent and SacOil 20 per cent.
For more details contact;
Dupe Kupoluyi Olusola
Transnational Corporation of Nigeria Plc