BG E&P Nigeria farms into deepwater oil license

Uchenna Izundu
International Editor

LONDON, Aug. 20 -- BG Exploration & Production Nigeria Ltd. will pay $75 million to Equator Exploration Ltd. for a 20% interest in a production-sharing contract for Nigeria's deepwater oil prospecting license 323 (OPL 323). The transaction needs approvals from authorities in Nigeria, including Nigerian National Petroleum Corp.

The sum represents both cash and carry on future expenditure.

Equator Exploration originally had a 30% stake in OPL 323 and as part of the transaction has agreed with its Nigerian partners to buy back 3% of the net profits interest granted in March 2006 once the farmout is completed. Equator's final net economic stake in the license will be 9% after recovery of costs.

The license partners are trying to secure a rig to drill their first well on the license, which they believe holds aggregate prospective resources of 4.8 billion bbl. Interpretation of regional 3D seismic data covering the block has identified six large prospects, five of which are supported by amplitude anomalies. The block is in an area with access to source rocks and abundant reservoir sands.

OPL 323 lies 80 km off Nigeria in 1,300-2,000 m of water. The large Abo field in OML 125 operated by Agip is to the east, and ExxonMobil Corp.'s Bosi and Ehra discoveries in OPL 209 are to the immediate south of the block.

Korea National Oil Corp. is operator with a 60% interest. Local Nigerian companies hold the remaining interests in the blocks except for the BG E&P and Equator Exploration interests.

Contact Uchenna Izundu at [email protected].