Joint-venture partners in the OML 113 permit offshore Nigeria will decide on supporting Phase 2 of the Aje development following the completion of technical work on the field.
The OML 113 offshore block, which contains the Aje field, is operated by Yinka Folawiyo Petroleum. Other members in the Aje JV are New Age, Energy Equity Resources, Mx Oil, and Panoro.
Mx Oil said on Monday that the continuous oil production of Aje-4 and Aje-5 wells was above initial expectations and encouraged the operator to approach consultancy company RPS to investigate the viability of further development of the Aje field.
RPS was appointed in late October 2018 to conduct an assessment of the potential development activity associated with the additional upside oil resources.
“The modeling work conducted to date has reinforced the partners’ view of the potential for new oil wells in both the Turonian and Cenomanian,” Mx Oil added.
According to Mx Oil, RPS is expected to finish its work in Q1 2019 and will form the basis for a decision on further drilling in 2019 (Phase 2) with a view to a full development project after that.
The partners believe that the initial development drilling may result in peak oil production rates of 8,000 to 12,000 barrels of oil per day. Currently, the field is producing around 3,150 bopd.
Mx Oil said that the full development drilling might increase production to 20,000 barrels of oil per day and 100 million standard cubic feet per day of gas.
Phase 2 financing
Mx Oil said that the JV was still assessing options to meet funding requirements for the completion of the additional wells expected in Phase 2 and later the full field development.
The company added that, due to the impracticality of funding projects the size of Aje through equity, the partners began steps to procure debt funding for Phase 2 and potential future stages.
These discussions are expected to continue throughout the first half of 2019 to ensure the funding solutions and the technical output of the modeling work are in place so a decision on Phase 2 can be made quickly.
It is worth noting that there has been a significant reduction in the monthly operating expenses which are 66% lower than those in 2018. Mx Oil stated that it would significantly strengthen its position ahead of the Aje Phase 2 development decision.
1,2M barrels in 2018
During 2018, production from the two wells in the Aje field achieved a total produced volume of around 1,200,000 barrels of oil.
The partnership completed the ninth lifting from the Aje field in late November 2018 offtaking approximately 315,000 barrels of oil. The tenth lifting is scheduled to occur in late February 2019.
The JV partners saw first oil flow from the Aje field back in May 2016. Oil produced from the Aje field is stored on the Front Puffin FPSO which has production capacity of 40,000 barrels of oil per day and storage capacity of 750,000 barrels.
Also, following the consent from the Minister of Petroleum Resources to renew the OML 113 license for another term of 20 years in August 2018, the Aje partners fully paid the $9.8 million license renewal fee.
Stefan Oliver, Mx Oil CEO, said: “The Aje partnership has continued to make significant progress towards the realization of a Phase 2 development of Aje. 2019 is poised to be an important year for the company and its stakeholders as we expect to see continued encouraging progress through the work undertaken by RPS Group towards an investment decision on the Phase 2 development.
“With the continued stable production from the field, the current well economics and the work to increase production rates, [Mx Oil] is well positioned to see a potential significant revaluation of its investment in Aje arising from the development strategy of the Aje field.”