Okoro Setu

* Share of Profit Oil after cost recovery

Background
The Okoro Field (Okoro) and Setu Field (Setu) are located in OML 112 in shallow water offshore Nigeria, and were originally awarded to Amni - a well established indigenous oil company - in 1993 as part of the Nigerian government's indigenous licensing programme.

Okoro Field
Okoro was discovered in 1973 by Japan Petroleum with the Okoro-1 well.  The well encountered oil in two zones in the Agbada Formation and was logged and tested.  The Okoro-2 well was drilled in 1974 at the eastern extension of the field and was water wet. The field is covered by good quality 3D seismic data which was acquired by Mobil Corporation.

Powerpoint of a perspective view of the Okoro pay (1 MB)

Setu Field
Setu is located 7 km North of Okoro and was discovered by Amni in 2002 with the Setu East-1 well.  Five oil bearing zones were encountered in the Agbada Formation and all were successfully tested at individual rates above 1,900 bopd. A second well, Setu East-2, was drilled to the west and was water wet.

Terms
In June 2006, Afren signed a Financing and Production Sharing and Technical Services Agreement with Amni for participation in the development of Okoro and Setu.  Under the terms of the agreement, Afren will finance the development programme.  Afren will recover these costs with an uplift on its capital, from 95 per cent of the barrels produced, net of operating costs and royalties. Following cost recovery, Afren and Amni will share the production equally.

Operations update
During 2007 the partners received approval of the Field Development Plan and secured a Floating Production Storage and Offtake Vessel (“FPSO”).

In Q1 2008, development drilling commenced from a subsea template using Transocean's Adriatic-6 jack-up rig.  The 10-point fixed mooring system for the FPSO vessel was installed in January and the Armada Perkasa arrived in March 2008 and was hooked up to the anchor system.

In May 2008, the wellhead platform was installed and flowline connections made.

First Oil was achieved during June 2008 when production from the first two production wells drilled commenced at a rate in excess of 3,000 barrels of oil per day (bopd) 27° API oil from each well in line with expectations. A further five wells were subsequently drilled, completed and brought onstream. The wells drilled were a mixture of horizontal and highly deviated penetrations of the reservoir intervals. Reservoir quality was typically at the higher end of expectations.

Production in 2009 averaged 18,872 bopd, ahead of pre development expectations for that period.  This is a result primarily of better than forecast reservoir properties and good aquifer support. At least two infill targets have also been identified and will be drilled in 2010, adding reserves and incremental production volumes.