Zenith Energy and ADM Energy appear set to clash over an oilfield offshore Nigeria, with both companies laying claim to a stake in it.
Zenith announced today that it had struck an option agreement with Noble Hill-Network (NHNL). The latter is the sole owner of the risk service contract (RSC) for the northwest part of OML 141.
This covers 105 square km and holds the Barracuda and Elepa South fields, with the potential for more.
Not so fast, says ADM. This company has bought a 51% stake in KONH UK, which has an indirect 70% stake in the Barracuda field, on OML 141.
Earlier this month ADM said a dispute had arisen over KONH UK’s ownership of NHNL. ADM said the dispute is without merit and there has “been no subsequent change to KONH’s position as majority shareholder in NHNL”.
ADM went on to note some talk of a demand for $1.75mn from NHNL. The company denied this obligation had been included in its contractual documents.
Zenith’s plans focus on developing the Barracuda field. The company said it will jointly develop the RSC with NHNL.
Initially, it will drill, test and complete the Barracuda 5 (B-5) well. Should it be successful, it would begin producing immediately to a barge-mounted early production system (EPS).
The option gives Zenith the opportunity to buy a 42% stake in NHNL for $20 million. This would be payable in seven portions over 270 days. Zenith’s option will expire on January 15, 2022.
NHNL plans to use the cash to fund the drilling of B-5. Zenith said a drilling contract would be signed in January 2022 with operations beginning in the first quarter.
Barracuda would begin producing in the second quarter, at a rate of around 4,000 barrels per day of oil.
The operator has also chosen follow up drilling sites for three more wells on the Barracuda field.
Zenith CEO Andrea Cattaneo said due diligence was ongoing in the acquisition.
“The near-term drilling of B-5 is an opportunity for Zenith to rapidly achieve a material progression in its development by exploiting the considerable production potential of the Barracuda oilfield. We view the risk profile of drilling B-5 as low to medium primarily, amongst other factors, due to the strongly confirmed presence of hydrocarbons in nearby wells accessing the same formations,” he said.