Afren

Eremor Field (OML 46)

Background

The Eremor Field (“Eremor”) was awarded to Excel - a well established indigenous oil company - in the 2003 Nigerian Marginal Field round.  Eremor is an undeveloped field in OML 46, located onshore in the Niger Delta.  The field was initially discovered by Shell in 1978 (Eremor-1), and encountered five hydrocarbon bearing zones.  Three additional wells were drilled to appraise the areal extent of the accumulation between 1984 and 1990.  The field is covered by good quality 3D seismic data and is estimated to contain in place volumes of up to 30 million barrels in the D3.0 reservoir, with a similar potential upside in the shallower D1.0 reservoir.  Recoverable reserves are estimated at up to 10 million barrels from the D3.0 reservoir.

The field is located close to existing infrastructure and within 12 km of a number of Shell producing fields.

Terms

In July 2007, Afren signed a Financing and Production Sharing and Technical Services Agreement with Excel for participation in the development of Eremor.  Under the agreement, Afren will be responsible for financing Phase-1 of the Field Development Plan, and will initially recover the investment from 90 per cent. of net field revenues with an uplift on its capital.  Following cost recovery, Afren and Excel will initially equally share production revenue and costs.

Operations update

The Eremor-1 well was suspended and will be re-completed as a production well, using downhole sand control. A second production well is planned to follow after production has commenced and initial field performance has been established.

Various export solutions are actively being pursued, with the preferred option being a barge facility to process the Eremor crude and then transport the treated crude to the Brass Creek manifold. First oil production is expected during early 2009.

The oil-in-place range for the D3.0 zone is 8-30 mmbbl, with a mean of 17 mmbbl. The initial two-well development programme is expected to produce 4-5 mmbbl, with an initial production rate of 2,000 bopd from the re‑entered well. Netherland Sewell & Associates recently issued a certified reserves report with oil reserves of 2.9 mmbbl (1P) and 4.1 mmbbl (2P).

Development drilling to commence on the Eremor field in Q4 2008, first oil is expected during early 2009.