London-listed ADM Energy, an oil and gas investing company operating in Nigeria’s upstream sector is targeting three additional new oil wells and a net daily production of 1,000 barrels per day on Oil Mining License (OML) 113 by 2021.
This development comes after the company received ministerial consent from the Nigerian Minister of Petroleum Resources to complete the transfer of a participating interest of 2.25percent in OML 113 which contains the Aje oil and gas field from Nigeria based Energy Equity Resources Limited.
“The completion of this deal consolidates our position in the Aje Field; We nearly double our share of revenue, reserves and net production, and with the joint venture partners targeting three new wells in 2021, net daily production to ADM is projected to rise to as much as 1,000 barrels per day,” Peter Francis, Non-Executive Chairman of ADM Energy plc, said in a statement seen by BusinessDay.
The chairman of ADM Energy plc noted that the transaction aligns with ADM Energy’s growth strategy which is also typical of the type of deal the company want to achieve to build value and gained strong foothold most especially in a field with deeper understanding.
OML 113 holds the Aje field. ADM already holds a 2.7percent stake in the block, taking its interest to 4.9percent. This will give it a revenue interest of 9.2percent and a cost-bearing interest of 12.3percent.
ADM’s net production will rise to 196 barrels per day of oil, from 106 bpd, while its net 2P reserves will rise to 16.4mn barrels of oil equivalent, from 8.9mn boe.
“We have de-risked the asset through our technical expertise and working alongside high-quality partners.
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Having completed the transaction at a premium to our share price, we now stand to benefit by developing the field and unlocking the upside for shareholders,” Francis said.
Going forward, Francis explained that the company is “focused on advancing the multiple other deals we are working on and growing our exposure to value accretive, high-quality assets.”
ADM Energy entered into a sale and purchase agreement with EER to acquire in February 2020, subject to certain conditions, a participating interest of 2.25percent from EER in the Block.
According to the company formerly known as MX Oil, the total consideration for the Agreement is $3 million which was originally intended to be satisfied by the issue of $2 million of new ordinary shares at 7 pence per share and $1 million in cash at the time of completion.
In May 2020, the Company announced that it had paid a deposit of $250,000, comprising $125,000 in cash and $125,000 in equity through the issue of 4,242,696 new ordinary shares of 1 pence each at 2.4 pence per share at an exchange rate of $1.23:£1.
In August 2020, ADM and EER agreed that of the remainder of the cash component of $750,000, $250,000 would be settled in shares, at a price of 5.5 pence per share at the prevailing exchange rate at the time of completion, and $500,000 would be settled in cash.
OML 113 covers an area of 835km² in the western Nigeria offshore Dahomey basin, some 24km south of the coast and 64km from Lagos, in water depths ranging from 100 to 1,000 metres.
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