TotalEnergies is pressing ahead with its infill drilling on OML 130, with success unlocking refinancing for Prime Oil & Gas – but a local campaign against the work continues.
The Noble Gerry de Souza began its work on OML 130’s Egina field in February. The contract runs until November this year, although there are options for more work.
Africa Oil has said the partners plan nine wells on the Egina and Akpo fields over the next year, into 2024.
In May, Total said it had renewed the OML for another 20 years. Africa Oil reported that the Akpo, Egina and Preowei fields would fall under the new Petroleum Industry Act (PIA) terms. Preowei has not yet been developed but there are plans to link it via a subsea tieback to the Egina FPSO.
Freeing up financing
The extension of the licence allowed Prime to refinance. Prime has an 8% working interest in OML 127 and 16% in OML 130, giving Africa Oil 4% and 8% net.
Prime had a pre-export finance facility and a reserve-based lending (RBL) facility carrying a total debt of $720.3 million at the end of the first quarter.
On June 20, Africa Oil said Prime had refinanced under one RBL, with a $1.05 billion principal. Prime had cash of $397mn as of the end of the first quarter.
Africa Oil bought a 50% stake in Prime in January 2020 for $519.5mn. It has taken $712.5mn in dividends from the company, recovering its investment in under three years.
TSX-listed Africa Oil said that it had also increased its standby credit facility to $200mn, from $100mn previously. It has not drawn this down and has $158.2mn of cash.
Keith Hill, president and CEO of Africa Oil, said the financial moves gave the companies “greater flexibility in their near-term capital allocation decision making, underpinned by strong balance sheets in both businesses. At Africa Oil, we are well positioned to pursue our ambitions for further growth and improved shareholder returns at the appropriate time.”
However, there are some concerns ahead. The South South Reawakening Group (SSRG) has raised its concerns around contracting practices on the OML 130 work.
SSRG, in a statement this week, raised concerns that had previously been put forward by Palmeron on the drilling programme. Energy Voice reported on these in February.
Palmeron took Total and Nigerian agencies to court. It reported that the court ruled drilling should not happen while the matter was being considered.
National Petroleum Investment Management Services (NAPIMS) – now NNPC Upstream Investment Services (NUIS) – and Total appealed the ruling in May at a Lagos court. SSRG reported Total had been ready to settle the matter out of court but NUIS head Bala Wunti was “vindictive” and intended to “continuously frustrate any meaningful negotiation and award of the contract to Palmeron”.
SSRG reported a number of allegations made by Palmeron. This included a report that the use of the Gerry de Souza cost more than the rig Palmeron had chosen.
SSRG went on to say Nigerian National Petroleum Corp. (NNPC) was guilty of “fraudulent patterns and intentional negligence”. NNPC has not responded to a request for comment.