Afren

Ofa Field (OML 30)

Background

The Ofa Field (“Ofa”) was awarded to Independent Energy Limited (“IEL”) - a well established indigenous oil company - in the 2003 Nigerian Marginal field round. Ofa is an undeveloped oil field in OML 30, located onshore in the Northern Niger Delta. The field was initially discovered by Shell (Ofa-1) and subsequently appraised by the Ofa-2 well. Ofa is covered by good quality 3D seismic data and consists of up to eight oil bearing reservoir intervals in the Agbada Formation between 6,670 and 7,280 feet. A recent independent assessment by Gaffney, Cline & Associates estimates mean Stock Tank Oil Initially in Place ("STOIIP") of up to 150 million barrels. Ofa is located close to existing infrastructure and a number of producing fields. As a result, the development of Ofa is expected to be low-cost - a simple flow-station connected to the export line located circa 200 metres from the field.

Terms

In May 2007, Afren entered into an agreement with IEL to farm into - and jointly develop - Ofa.  Under this agreement, Afren will be responsible for paying all costs for the development of the field, and will recover the costs from 90 percent of net field revenues.  Following cost recovery, Afren and IEL will share production revenue equally.

Operations update

In 2007, Afren and IEL carried out a test programme on three of the eight potential oil zones using a hydraulic workover rig. An electric submersible pump (ESP) was used to supplement any natural flow in order to determine if commercial flow-rates could be achieved.

The lowermost zone (N4000) initially produced oil at rates up to c. 1,000 bopd but production was not sustained due to production of water. A second test of the N1000/M8800 zones was undertaken but despite initial minor oil production, the zones only produced formation water. Following these test results, Afren has decided not to proceed with development at the present time, but will assess the potential for other field development options with its partner IEL.