Nigeria-focused operator Sirius Petroleum has signed a sale and purchase agreement to acquire a 75% stake in Precision Energy Tetra 109 (Sirius JV) from Precision Energy Group (PEG).
The Sirius JV, in turn, conditionally agreed to acquire a direct 40% equity and up to 80% economic interest in Tetrarch Limited from Tetrarch Holdings Limited.
Tetrarch is an 80% shareholder in Tetra Energy Services, which wholly owns Tetra Petroleum Oilfield Services (TPOS). TPOS has entered into a petroleum services contract (PSC) to provide certain petroleum services to owners of the license known as OML 109.
Once the transactions are completed, Sirius JV will hold an effective indirect economic 30% interest in the cash flows of TPOS through its economic interest in Tetrarch. The JV will provide petroleum services to Tetrarch and in relation to the PSC in which the Sirius JV and its operational partners expect to take an active role in providing such services.
Sirius said that there was only nominal consideration of £1 payable on the acquisition, which is conditional upon Sirius JV sourcing for $40 million of external debt funding, to be provided by a third-party funder, to be deployed towards the execution of a minimum work program commitment on the Ejulebe field, a producing field located in the northeast corner of OML 109.
Sirius stated that it was in advanced discussions with a third-party funder for the provision of required funding.
Ejulebe work program
The work program is separated into two phases. Stage A is designed to boost current production on the Ejulebe Field from 250 barrels of oil per day to over 5,000 bopd, by providing a workover on one existing well and the drilling of one new development well EJ-9 and, as an option, two additional work-overs or side-tracks of existing wells.
Stage B of the program is one exploration well on the EJ-WSW prospect which holds gross unrisked P50 resources of 32-38 mmboe.
EJ-WSW is located near the Ejulebe field and is expected to have similar reservoir characteristics to the Ejulebe field. The proximity of the prospect to the existing Ejulebe production facilities would allow a fast-track development in the event of a commercial discovery.
It is worth noting that Sirius shares in Tetrarch would be held in escrow until both phases of the work program were completed.
If Stage A does not start within 90 days of the completed transactions, Tetrarch will have the right to terminate the transactions. If Stage A is completed, but Sirius JV does not spud the exploration well as set out in Stage B immediately after that, then all arrangements entered into between Sirius JV and Tetrarch in relation to OML 109 will terminate.
Bobo Kuti, CEO of Sirius, said: “The proposed acquisition would be a significant addition to the Sirius portfolio and we look forward to working with the co-owners of the asset and our operational partners to boost production on the Ejulebe field. We are also excited to explore the EJ-WSW prospect, which, if successful, could potentially add material reserves.”
OML 109 is an Oil Mining Licence in shallow waters offshore Nigeria located approximately 30km south of OML 95, where the Ororo field is located.
Encompassing 191,000 acres or 773 square kilometers, the block has only been addressed with three exploration wells in its entire history, the first in 1966. Extensive oil and gas infrastructure exists in and around the block, including that of the Ejulebe field.
The field comprises some 15 hydrocarbon-bearing horizons, producing oil, associated and non-associated gas with gross remaining 2P reserves of 4.7 mmbbls.