Firm to Invest U.S.$215 Million in Oil Block in Nigeria

Houston-based energy group, Blacksands Pacific Group has said it would invest $215 million in the first phase of development of the Oil Prospecting Lease (OPL) 2012, located offshore Niger Delta.

Blacksands and its affiliates recently entered into an Agreement with Sigmund Oilfields Limited and Grasso Consortium comprising Grasso Nigeria Limited, Oil and Gas Mission Limited and Eurafric Energy Limited for the development of the Oil Prospecting Lease (OPL) 2012.

The company said in a statement that the partnership was aimed at extending its indigenous partnership in the country by executing an agreement with Sigmund, to jointly explore, develop and produce from the oil block (OPL 2012).

Under the terms of the farm-in (participation) agreement with Sigmund Oilfields, Blacksands Pacific as Joint Operator, technical and financial partner would acquire 40 per cent equity and legal interest with an effective 60 per cent economic interest (subject to gross volumes lifted). Blacksands Pacific said it had undertaken to fund 100 percent of the work program.

The OPL 2012 was awarded to Grasso Consortium consisting of Grasso Nigeria Limited, Oil and Gas Mission Limited and Eurafric Oil field Limited. The consortium transferred 84percent ownership of the OPL Block 2012 to Sigmund Oilfield Limited.

As the Joint Operator and financial partner, Blacksands Pacific said it would be responsible for the development of OPL 2012 and would be responsible for 100 percent of Working Interest by providing the required funding and technical expertise for the exploration, appraisal, development and production of hydrocarbons, including drilling and mining activities within the OPL 2012, which includes satisfying the required regulations for converting the block to an Oil Mining License (OML).

The company said the near-term work program would consist of payment of the statutory signature bonus to the Department of Petroleum Resources (DPR) for the oil block and payment of farm-in fees to Sigmund Oilfields Limited and the Grasso Consortium.

The company said it planned to commence negotiations of the Production Sharing Contract (PSC) with the DPR in Nigeria together with Sigmund Oilfields Limited and Grasso Consortium.

The OPL 2012 is located offshore Niger Delta, in shallow waters between 50 and 100m, within a highly prospective zone bordered by Shell’s HD field to the northwest, NNPC’s Agbara field to the west, several oil and gas discoveries of Addax to the south, H1 field of Sunlink to the west and JK Field of Shell to the north.

According to the company, part of the PSC negotiation would include the unitisation of the Agbara Field in which reservoir straddles between the OPL Block 2012 and the OML Block 116 operated by AGIP/ ENI.

“In addition to the signature bonus and farm-in fees, Blacksands Pacific will also invest approx USD$215million into the Phase I development of the OPL 2012 and the cost recovery for such investment will be from hydrocarbon produced.

“The agreement executed between Blacksands Pacific and Sigmund Oilfields defines the commercial terms under which Blacksands Pacific through its International subsidiary (Blacksands Pacific International Limited including subsidiaries) will participate in the exploration, development and production from the leased area covered by the Oil Prospecting Lease Block 2012 (pursuant to the execution of a Participation Agreement, Joint Operating Agreement, and the completion of the PSC with the DPR and provides for Blacksands Pacific to acquire a 40 per cent legal and beneficial (“equity”) interest in OPL 2012 with 60 per cent economic interest (subject to requisite approvals)”, the company said.