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COPL agrees offtake deal for Nigerian licence

Published: 08:35 30 Jul 2018 BST

Nigeria flag
OPL 226 is in shallow to mid-water

Canadian Overseas Petroleum Limited (LON:COPL CVE:XOP) has taken a first step towards financing the development of the OPL226 licence offshore Nigeria.

COPL’s  50% owned joint venture company Shorecan has agreed to a project financing and offtake agreement term sheet for between US$30mln to US$50mln with Mauritius Commercial Bank and commodities trading group Trafigura.

WATCH: Canadian Overseas Petroleum's Nigeria financing 'coming together'

The facility would cover expenses after an initial production well has been drilled and tested by ShoreCan’s 80% owned affiliate Essar Nigeria.

Receiving the money requires US$33 mln of additional funding from ShoreCan; US$100 mln funding from an offshore oil services group to deliver the project; and a minimum of 6,000 bbl./d production rate averaged over 20 days from the well test.

The facility will have a two-year term with US$3mln of warrants attached. 

Essar's horizontal plan

Essar Nigeria’s plan is to drill a horizontal oil production well offsetting the 2001 NOA#1 oil discovery well at OPL226.

After that, there will two or three additional high angle oil production wells drilled in the adjacent NOA East fault block from a common wellhead platform with the aim to bring these into wells into production early.

A work program for this initial campaign on OPL226 is expected to be submitted to the Nigerian authorities in the near term.

ShoreCan is in late-stage discussions with the Service Provider, which involve the provision of drilling services, the supply of a mobile production unit and a storage vessel for a deferred fee.  

Arthur Millholland, COPL’s chief executive, said though only a first step at OPL 226 he was confident it can complete the process to enable Essar Nigeria to commence this first phase of development operations.

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