London-listed and Nigeria-focused oil and gas investor, San Leon Energy has discovered a commercial quantity of crude oil and natural gas on Nigeria’s Oza oil field, after pumping cash into several drilling programs.
According to the company, which has an investment agreement with Nigeria-based subsidiary Decklar Petroleum, the Oza-1 well re-entry programme has now seen initial gas flows of 10.3 million standard cubic feet of natural gas per day and 1,361 barrels of oil per day.
“Oza-1 is now expected to be put to commercial production, once completion equipment is installed,” San Leon Energy said in a statement.
The company noted that Oza has significant export and production capacity through “processing facilities and infrastructure already in place and operational which expedite the start of production and sales”.
BusinessDay’s reviews of the 2021 half-year performance of San Leon showed the firm reported an $8.1million profit from continuing operations in the half which excludes repayments of loan notes (which amounted to $800,000 in the half as certain due payments were waived whilst due diligence takes place for the proposed transaction).
In terms of the underlying OML 18 assets in Nigeria, the company noted that deliveries delivered to the Bonny terminal for sale amounted to around 6,600 barrels of oil day in the first half which was impacted by continued losses and downtime associated with the use of the Nembe Creek Trunk Line, OPEC restrictions, and reduced operations related to COVID-19 and capital discipline.
San Leon also announced it has entered a conditional subscription agreement with Decklar Petroleum, the local subsidiary of Decklar Resources, which entitles San Leon to purchase $7.5 million of 10percent unsecured subordinated loan notes of Decklar Petroleum and 15percent of the enlarged share capital of Decklar Petroleum.
The two companies also have an option agreement which, at San Leon’s sole discretion, entitles San Leon to purchase an additional $7.5million of loan notes and further Decklar Petroleum shares representing an additional 15percent of the enlarged share capital of Decklar Petroleum.
The Oza Field is an onshore conventional oil field, on dry terrain, in the northwestern part of Oil Mining Lease (OML) 11, approximately 30 kilometres southwest of Port Harcourt which is part of the Abia State in Nigeria.
The field was formerly operated by Shell Petroleum Development Company of Nigeria Ltd., the local subsidiary of Royal Dutch Shell plc.
The 20 square kilometres concession was carved out of OML 11 in 2003 as part of the Government’s Marginal Field Development Program and was awarded to Millenium Oil and Gas Company Limited (“Millenium”) having won the bid during the 2003 Marginal Fields Licensing Round.
Decklar Resources is developing the field through a Risk Service Agreement (RSA) with Millenium. The Oza Field is surrounded by producing fields operated by Shell, including Isirmi, Obeakpu, Afam, Obigbo and Umuosi.