ADM Energy has received ministerial consent from the Nigerian Minister of Petroleum Resources ("DPR") to complete the transfer of a participating interest of 2.25% in OML 113 (the "Block") from EER (Colobos) Nigeria Limited ("EER") to the Company.  

Map source: ADM Energy

Highlights

• ADM acquires 25% of the interests, rights and obligations held by EER in OML 113
• Participating interest in OML 113 will increase to approximately 4.9% from 2.7%
• Corresponding profit and cost bearing interests will increase from 5.0% to 9.2% and from 6.7% to 12.3% respectively
• Net 2P reserves increase to 16.4 MMboe from 8.9 MMboe (as announced on 2 May 2019)
• Net daily production is expected to rise to approximately 196 bopd from 106 bopd, based on current production  

Peter Francis, Non-Executive Chairman of ADM Energy plc, said: 
"The completion of this deal consolidates our position in the Aje Field, a proven and versatile oil producing asset offshore Nigeria. 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.

"This transaction aligns with our growth strategy and is typical of the type of deal we want to achieve to build value for ADM. We have gained a strong foothold in an oil field that we understand intimately. We have de-risked the asset through our technical expertise and working alongside high-quality partners. 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. Building on this platform, we are focused on advancing the multiple other deals we are working on and growing our exposure to value accretive, high-quality assets.

"In addition, Hessia Group Limited, an existing investor in ADM and the beneficial holder of the Consideration Shares as part of the completion of this agreement, becomes the Company's largest shareholder and remains a long term and supportive holder of ADM shares."

Yinka Ogundare, CEO of EER, said: 
"We are very pleased to deepen our ties with ADM by concluding this transaction. Their expertise and access to funding will help the partners to move forward with plans to increase oil production at the Aje Field and monetise the rich gas and liquids reserves."

Aje field

OML 113 covers an area of 835 sq km offshore Nigeria close to the Benin border and holds the Aje Field, first discovered in 1997, as well as a number of exploration prospects. ADM Energy holds a 5% profit interest in the Aje Field and in February 2020 entered into an agreement with EER (Colobos) Nigeria Limited to acquire a further 4.2% profit interest.

The Aje Field is an oil producing asset which is rich in gas and condensate reserves in the Turonian, Cenomanian and Albian sandstones, similar to the producing Jubilee field offshore Ghana. To date five wells have been drilled: Aje-1 and Aje-2 both flow tested oil and gas condensate at high rates and it currently has two producing wells, Aje-4 in the Cenomanian and Aje-5 in the Turonian.

Aje is strategically located 24km offshore Lagos where it benefits from increasing local energy demand, particularly for gas which is viewed as a replacement fuel for diesel and commands a premium. The field is also within close proximity to the West African Gas Pipeline which presents a potential opportunity for gas monetisation in neighbouring countries such as Benin and Togo.

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 Aje Cenomanian 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.

KeyFacts Energy: ADM Energy Nigeria country profile