Nigeria approves Oriental's Okwok farmin

July 3, 2006
Oriental Energy Resources Ltd. of Nigeria has received Nigerian government approval to farm in to offshore Okwok oil field.

By OGJ editors
HOUSTON, July 3 -- Oriental Energy Resources Ltd. of Nigeria has received Nigerian government approval to farm in to offshore Okwok oil field in OML 67, reported Sovereign Oil & Gas Co. II LLC, Houston, the company's technical advisor.

Okwok was discovered and partially appraised in 1968 by Mobil Producing Nigeria Unlimited and Nigerian National Petroleum Corp. (NNPC). The field is in Nigeria's prolific southeastern producing area, 35 miles northeast of the Zafiro field complex off Equatorial Guinea (see map, OGJ, Feb. 26, 2004, p. 30).

The Okwok farmin was designed as a way for Nigeria to partially compensate Oriental for losses it sustained in a late 2000 maritime boundary treaty involving Zafiro drilling and development rights. The treaty required Oriental to relinquish the southern 20% of its OML 115 to Equatorial Guinea.

ExxonMobil Corp. operates Block B on the Equatorial Guinea side of the boundary and consequently was a beneficiary of the OML 115 acreage lost by Oriental. On the Nigerian side of the boundary, Oriental's OML 115 is surrounded by OML 67, which includes two undeveloped Okwok and Ebok oil fields.

In 2001, Mobil contributed Okwok field to Nigeria's Marginal Field Program, established by the federal government to encourage Nigerian companies to invest in the country's oil and gas industry. The program allowed for any oil field not developed within 10 years of discovery to be designated a marginal field and be farmed out to investors and local entrepreneurs.

Okwok and Ebok fields have had no drilling since 1970.

Under the Okwok farmout, Oriental will become operator. Addax Petroleum (Offshore Nigeria) Ltd. will join the project as technical advisor and own a 40% participation interest, pending government approval. Addax Petroleum operates the adjacent OML 123, which lies north of Okwok field and produces in excess of 50,000 b/d of oil.

Oriental and Addax plan to drill up to three appraisal wells in Okwok using the GlobalSantaFe High Island IX jack up. Appraisal drilling was scheduled to begin in June with the Okwok-4 well.

An earlier field study by Sovereign revealed large potential traps in Qua Iboe in 150 ft of water with the potential to hold several hundred million barrels of oil reserves (OGJ, Feb. 16, 2004, p. 15).

Of four wells previously drilled in Okwok, three by Mobil and NNPC, and one by Oriental and Conoco, two encountered several thick petroleum-bearing sands but were not production-tested. Okwok field is defined by these wells and by recent 3D seismic data.