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.