Assets

OML 53

NDEP acquired a 100% stake and operatorship of the Omerelu Farm Out Area in 2014 from the NNPC/Chevron (JV) with the NDPR granting NDEP an equitable interest in the reservoir. One vertical exploration well was drilled in 1975 by Chevron (the, Gulf Oil) with a sequence of five vertically stacked reservoirs and target depth of 9,000ft.

The field development plan (FDP) is targeting to drill a further two wells on top of the existing discovery made by Chevron with a flow station, and plans to build a 14km pipeline to Ogbele where it can be routed onto existing pipeline. The company is planning to submit the FDP by Q4 2014, with first oil in 2016 achieving peak flow rates of 5,000 – 10,000bpd in 2017.

OML 54

NDEP acquired the Ogbele Farm Out Area, which lies within OML 54, in 2000 from the NNPC/Chevron JV with the NPDR granting an equitable interest in the reservoirs. I, 2013, NDEP acquired 3D seismic data, processed and interpreted the data in order to identify new reservoirs and get a better structural view of the field. NDEP has 100% of this asset which covers 23k2, with license terms designed such that the license expires at the end of the field life.

Following this, NDEP drilled two additional successful wells in August 2013 and January 2014, thereby increasing production from an average of 1,188 bpd on 2013 to 4,500 bpd and 30 MMscf/d of gas as at 31st March, 2014. The discoveries included a significant 0.5T cf discovery within an 800 foot column of gas. To date NDEP has drilled 8 wells within the acreage, which include six side track wells.

Ongoing Ogbele field development includes Ogbele 7, to target a depth of 13,500 feet, which contains oil and gas. The development plan for the remainder of 2014 is to drill wells 8 and 9. Development wells 9 and 10, are planned for 2015, (the latter being an appraisal well with oil ad associated gas) which is expected to significantly increase daily production by the end of 2015.

The contour map shows the location of existing wells with the additional yellow area highlighting significant upside potential from similar geological structures that have been found to date. The rift (or finger-like) nature of the geology has led to the creation of vertically stacked reservoirs of which five have been brought into production. We believe that as development proceeds a greater understanding of the potential of the acreage will evolve, leading to more gas than oil targeted exploration.

The full field development plan envisages drilling 15-18 wells all of which are directional, at a cost of around US$18m per well. This implies a full field development cost of US$300-400m, including infrastructure. Currently, produced oil is transported by a 6” pipeline to a third party trunkline which terminates at Royal Dutch Shell’s Bonny terminal. Gas is sold to Nigeria LNG Ltd (NLNG) and to local industrial users.

Longer term, NDEP would like to create a ‘gas hub’ at Omerelu in order to attract third party gas needs and increase the pace of development around existing asset base.

OML 34

OML 34 is owned through NDEP’s 41.67% owned subsidiary ND Western Ltd, who respectively own 45% of the Block, with the NPDC operating the asset (55% stake). NDEP therefore has an 18.75% interest in the block which covers a large 951km2 area. NDEP originally acquired OML 34 in 2012 from Royal Dutch Shell who have been busy divesting marginal fields throughout the Niger Delta region. The field has a license expiry date of 2019.

OML 34 contains several discoveries including Utorugo, Ughelli East, Ughelli West, Warri River and Effurun discoveries. Over 100 wells have been drilled since the first discovery was made in 1959, with 80 producing wells in the 1960s, with a cumulative production rate of 40kbpd. Production subsequently fell to 18kbpd during the exogenous economic shock of 1997/98, induced by lower oil prices which fell to an all-time low of $14/bbl (Brent).

Currently, there are 30 oil and gas wells in production, producing in excess of 15,000bpd and 300mscfpd of gas. Oil and condensate is mainly produced from Utorugo, Ughelli East and Ughelli West fields, with gas mainly coming from Utorugo and Ughelli East fields.

Production is gathered at flow station at Utorugo, Ughelli East, and Ughllie West, the transported through the Ughelli Pump station which was built by Royal Dutch Shell in 2002 for $48m.

Oil with associated water is then transported from Ughelli via the Trans Forcados pipeline to the Forcados terminal and processing and export facilities. Dry oil is also sent to the Ward Refinery via a 16″ pipeline.

Non associated gas is processed at the Utorogu NAG plant and exported via the Escravos-Lagos Pipeline System which connect the West African Gas Pipeline. Gas is also sold to local domestic such as power producers.

The development plan is to drill two new wells in 2014/15 as well as completing a 150mmcfpd NAG plant at Utorogu by mid-2015, to bring total capacity to over 500mmscfpd.

Other possible options to expand development include the reactivation of the Warri field which witnessed some of the worst social unrest in the 1990s was closed by Shell in 1997. The Effurun field remains an undeveloped gas discovery.

OPL 227

NDEP, through its operating company, farmed into OPL 227 in 2010, with a licence lasting until 2013, whereupon an extension was granted until May 2015. OPL 227 lies in offshore Niger Delta and covers an area of 340km2, which is adjacent to Royal Dutch Shell’s OML 79 licence area.
Express Petroleum and Gas are operators (39% stake), with Addax Petroleum (owned by Sinopec) having a 40% stake. NDEP hold a nominal 6% stake in the asset.

An oil discovery was made in 2013 at Oma-2 which had 183 of net pay gas sand and 121 ft of net pay oil sands.

South Sudan

South Sudan is one of the world’s youngest countries, formed in July 2011, and is also one of the least explored having endured a civil war lasting from 1983 until 2005. Oil production didn’t recommence until May 2013 at 500.000bpd, with IOCs reactivating their interest in the area including TOTAL. Exxon Mobil, ONGC, and CNPC all acquiring acreage.

The petroleum geology of South Sudan is good with several rift basin present all of which confirm a working hydrocarbon system which forms part of the Central African Rift Valley. South Sudan currently relies on an export pipeline via Khartoum to Port Sudan and the Red Sea. Disputes have occurred regarding the fees payable for using this route and the South Sudan government has been keen to find other routes to export. These include routes through to Kenya or Ethiopia, and Djibouti. Such pipeline projects would only be viable if giant new oil discoveries were made.

NDEP have formed a JV with the South Sudan national petroleum company called Nile Petroleum Corporation. Currently, NDEP has no stake in licenses in South Sudan and is providing consultancy services to the government and using its projects in Nigeria like Ogbele and Omerelu as templates that could be applied to South Sudanese oil development. The ultimate goal in our opinion is to achieve a stake in a concession. We believe this could offer Bluesky potential for the company not only from the perspective of diversifying away from Nigeria, but also from the size of the prize and vast opportunity set which South Sudan’s concession areas represent.