Independent oil and gas exploration company African Petroleum (AP) has decided to exit its two operated licenses in Sierra Leone as a result of its choice not to commit to drilling an ultra-deep water well.
AP said on Thursday that the company will relinquish its interests in licenses SL-03-17 and SL-4A-17, where it holds a 100% interest, with immediate effect.
The relinquishment of the licenses is a result of the decision to not commit to an ultra-deep water drilling program and follows a period of discussion with the Petroleum Directorate of Sierra Leone, during which the parties failed to agree an extension to the licenses on suitable terms, AP explained.
Commenting on the update, CEO Jens Pace said: “The relinquishment of the blocks is a result of the company’s election to not commit to drilling an ultra-deep water well at this time, one that would set a world record water depth. Instead, we must focus our attention on areas where we see the best chances of value creation for our shareholders.”
Jens added: “Despite our efforts to progress our technical work program and secure partners for the Sierra Leone blocks, it has become apparent that the industry appetite does not currently exist for ultra-deep water exploration in this part of the African margin. Although it is disappointing to walk away from a technically interesting area, the outcome relieves us of onerous future cost commitments associated with these assets which I believe is the right course of action for the company.”
The company’s Sierra Leone licenses cover a combined net acreage of 3,925km2 and are located to the south of Freetown, offshore Sierra Leone.
On December 2, 2015, the company announced that it had entered into the First Extension Period on the SL-03 license. The expiry date of this first extension period was on April 23, 2017.
In December 2017 African Petroleum entered into the second extension periods of the SL-03 and SL-4A-10 licenses.
As a result of these agreements, the second extension period was supposed to expire on April 23, 2019, for SL-03 and on September 17, 2019, for SL-4A-10 if the subsidiary companies had committed to drilling one exploration well in each license area before November 1, 2018.