The Aje oil field located on oil mining lease (OML) 113 on completion of technical work by London listed ADM Energy and partners is set to increase production by threefold.
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Aje is currently producing about 3000 barrels of oil per day via two producers: Aje-4 in Cenomanianage sands and Aje-5 in Turonian sands, linked to the Front Puffin floating production, storage and offloading (FPSO) vessel. But on completion of technical work and some new injection of investments, the field is set to produce a gross output of up to 12,000 barrels per day, a 300 percent increase in production capacity.
The field’s proven reserves are 82.4 million barrels of oil equivalent, while proven, probable and possible reserves are estimated to be 220.8 million barrels of oil equivalent (boe).
In addition, the partners are developing plans to begin producing gas from condensate reservoirs in Aje’sturonian sands.
OML 113 contains the Aje oil and gas field which is situated 24 kilometres offshore adjacent to the border with Benin Republic. Aje is unusual for a Nigerian field because it lies in the Benin Embayment on the eastern edge of the West Africa Transform Margin, rather than the Niger Delta.
The water depth over the Aje field varies significantly. The continental shelf where the water depth is less than 100 metres gives way to a steep continental slope with water depths reaching up to 1,000 metres
“Discussions are taking place with potential off-takers and investors,” said ADM.
Yinkafolawiyo has a 41.9 percent stake in Aje. ADM holds 5 percent while the other partners are New Age on 24.1 percent, Energy Equity Resources on 16.9 percent and Panoro Energy on 12.2 percent. ADM, meanwhile, said it will become cash-positive in 2020, paving the way to launch “a portfolio of projects”.
It will target projects with “attractive risk-reward profiles across the oil services, power and energy sectors and in technology related to these industries, in order to build a portfolio of undervalued projects by originating deals for appraisal, development and producing assets.”
ADM aims to “option” assets where oil and gas has already been discovered and then make a debt or equity contribution to access upside for shareholders.
“The benefit of this approach is that ADM may only raise equity after the asset has in principle been secured, allowing the company to gear up its equity pre-commitment,” it said.
ADM may also consider buying producing assets in collaboration with bidding syndicates.
The company has alliances with debt providers in Africa who support natural resource deals.
“These relationships are mature and long-standing and can potentially provide funding that preserves equity for later deployment at higher, less dilutive valuations,” it said.
ADM is also developing a relationship with UK companyzark Capital “to seek alternative funding for investment opportunities as they arise.”
The Government of Nigeria approved the Aje Field Development Plan (“FDP”) in March 2014 and by October 2014; the Final Investment Decision (‘FID’) for the project was agreed. The FDP involves a three-phase development programme.
Phase 1 will focus on the AjeCenomanian oil reservoir and include the tie-back of two existing subsea wells and a leased Floating Production Storage and Offloading vessel (“FPSO”). Phase 1 production commenced in May 2016. The planning for Phase 2 is now underway and will see additional wells drilled in order to increase total Cenomanian oil production. Phase 3 will target the development of the Turonian gas condensate reservoir.
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