Oslo-listed oil firm PetroNor has signed an investment agreement with Nigeria’s Yinka Folawiyo Petroleum YFP setting a path forward for the future development of the YFP-operated Aje field in Nigeria’s OML 113 offshore license.
The two companies will create a joint venture firm named Aje Petroleum to focus on the revitalization and further development of OML 113 and the Aje oil and gas field, offshore Nigeria.
PetroNor in October agreed to buy out Panoro Energy from its Aje ownership, and the YFP agreement announced Thursday satisfies one of the key conditions for the completion the sale of Panoro’s interest in OML 113.
The remaining conditions to complete are the regulatory authorization from the Nigerian Department of Petroleum and Natural Resources, and the consent of the Nigerian Minister of Petroleum Resources, Panoro said Thursday.
Back to the agreement between PetorNor and YFP, the Aje Petroleum JV will be 55 percent owned by YFP and 45 percent owned by PetroNor.
The company’s board will consist of five directors, with two nominated by each of YFP and PetroNor and one independent director. One of YFP’s nominated directors will be the Chairman.
YFP, as the operator of OML 113, will engage Aje Petroleum as a technical service company. A joint project management team will be established by the Aje Board and be led by a member nominated by PetroNor (the “Technical Manager”). An early deliverable will be the agreement of a work plan and budget in relation to the operations of OML 113.
The Aje field was discovered in 1997 in water depths ranging from 100-1,500m. The field came on production in May 2016 with oil processed and exported from a leased FPSO, the Front Puffin.
It had produced a cumulative of 3.6 million barrels of oil and condensate as at August 1, 2019. PetroNor has been working with YFP, to prepare a revitalization plan for the field.
Jens Pace, Chief Executive Officer of PetroNor said: “This agreement is a key step in establishing a means to create partner alignment around our proposed concepts for the future development of the Aje Field. It builds on PetroNor’s successful business development track record of gaining access to opportunities by presenting commercial and technical solutions to asset owners in order to enhance value. In this case, it has led to the creation of a special purpose vehicle with majority of local content that is focused on realizing the value of OML 113. Following government approvals, the Company will advance plans for increasing liquids production, and developing the discovered gas resources.”
Knut Sovold, Chief Operating Officier of PetroNor and incoming Technical Manager for Aje Petroleum, said: “The fundamentals of the Aje Field are very encouraging. As part of our due diligence for the transaction, our technical team has looked closely at various development plans to fully monetize the Aje Field. We are looking forward to working closely with our partners on the licence to review and approve these plans.”
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