Oil and gas development and production company Sirius Petroleum is pushing on with discussions regarding funding of an acquisition of a stake in the shallow-water OML 109 block offshore Nigeria.
Sirius said on Monday that it was in advanced stages of discussions on funding.
The completion of the negotiations would enable the company to conclude a funding facility to be deployed towards the execution of a minimum work program on the Ejulebe field located in the block.
Namely, Sirius agreed to acquire a 75% stake in Precision Energy Tetra 109 (Sirius JV) from Precision Energy Group (PEG) back in early December 2018.
Under the acquisition agreement, the company will pay only a nominal consideration of £1 payable on the acquisition, which is conditional upon Sirius JV sourcing for $40 million of external debt funding.
The funds will 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.
Ejulebe work program
The Ejulebe 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.
“The transaction was conditional upon, among other things, Sirius having arranged for debt funding to be provided to fund certain capital expenditure on the Ejulebe field. The proposed debt provider views the transaction positively and has agreed that the transaction should now proceed on the basis that Sirius be both the borrower and guarantor of the proposed facility,” the company added on Monday.
In accordance with the AIM rules, Sirius shares have been suspended from trading on AIM with immediate effect and will remain suspended until an AIM admission document has been published or until the company confirms that the transaction is not proceeding.
As for the block, OML 109 is an Oil Mining License 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.
It is worth noting that Sirius completed its due diligence regarding the acquisition of a stake in OML 109 last week. Also, partners in the block agreed to extend the transaction period for a further 45 days until March 31.
In other company news, Sirius said on Monday that the drilling of the Ororo well was still on hold because the Shelf rig was working on its prior engagements