The investment will be made by way of an acquisition of a 51% interest in K.O.N.H. UK Limited, which holds an indirect interest in a Risk Sharing Agreement for the field. Consideration for the investment may total up to US$1.3 million, of which US$0.25 million is to be settled in cash on completion and the balance is to be settled in equity, at the higher of 7p and the then prevailing share price, on completion and on satisfaction of certain project milestones.
The RSA Consortium intends to provide or procure funding for all upcoming capital expenditure subject to the joint operators’ approval to develop the field, in return for 235% of approved CAPEX to be recovered plus a 15% Net Profit Interest (NPI) from the field. Post return of invested capital to the RSA Consortium, the RSA Consortium remains entitled to the NPI throughout the life of the field. The RSA also grants the RSA Consortium an option to acquire a participating interest in the OML 141 Licence.
A new work programme is also set to be produced by the RSA Consortium and joint operators. The Barracuda field has four existing wells drilled and it is intended that a fifth well will be drilled in 4Q21 – the intention is that ADM’s financing partner, Dubai Bridge Investments, may fund certain development costs of the Investment.
ADM’s internal estimate suggests that first oil of 4000 bpd may be possible in 2H21 and further increased by additional drilling. Following the receipt of the new CPR expected to be completed within the next few months and further technical appraisal work, it may be possible to:
- Increase production to ca.23 000 bpd by drilling six wells by 2026.
- Develop a 12 km pipeline to Brass Export Terminal, reducing operating expenditure to US$12/bbl (from US$20/bbl).
Osamede Okhomina, CEO of ADM Energy plc, said: “This is a compelling investment opportunity that provides ADM with the potential to access near-term production upside at minimal risk. The Barracuda Field in OML 141 fits our strategy to target near-term production assets in proven oil and gas jurisdictions and will establish ADM Energy as a multi-asset player in Nigeria. We will bring technical and financial support to the consortium to develop the asset and take it into production in the second half of this year. We have structured the deal to receive an accelerated cash entitlement once the field is in production, with the intention that the cost of the first well will be supported by our financing partner, Dubai Bridge Investments.”
HE Zubair Al Zubair, Chairman of Dubai Bridge Investments, said: “We partnered with ADM at the end of last year because their strategy aligned with our own of seeking out investment opportunities in the energy sector in Africa. The Barracuda Field, an attractive near-term production asset with significant potential upside, is the type of excellent opportunity we envisioned when we first decided to collaborate with ADM. Our planned financial backing combined with ADM’s extensive contacts and breadth of experience of the region and the oil and gas industry forms a formidable partnership and we look forward to building a long-term relationship.”
The company intends to raise approximately US$0.5 million in cash by way of a subscription, for new ordinary shares to, inter alia, provide funding for the Investment. The subscription will be effected by way of an accelerated bookbuild, at a price of 4.25 pence per new ordinary share. As part of the Fundraise, the company intends to enter into subscription agreements with investors and certain of its directors and PDMRs.
Read the latest issue of Oilfield Technology in full for free: Oilfield Technology's November/December 2020 issue
The November/December issue of Oilfield Technology begins by reviewing the state of the North Sea before moving on to cover a range of topics, including Drilling Technologies, Deepwater Operations, Flow Control.
Contributors come from Varel Energy Solutions, Gyrodata, Clariant Oil Services, Drillmec and many more.