Update on OPL 321 and OPL 323

 

TIDMEEL 
 
RNS Number : 2518M 
Equator Exploration Limited 
26 January 2009 
 

 
 
FOR IMMEDIATE RELEASE - 26 January 2009 
FOR: EQUATOR EXPLORATION LIMITED 
SUBJECT: Update on Status of OPL 321 and OPL 323 
 
 
 
 
London, 26 January 2009 - Equator Exploration Limited ("Equator" or the 
"Company") would like to update shareholders on recent events regarding the 
status of OPL 321 and OPL 323. 
 
 
BACKGROUND 
 
 
In the Nigerian 2005 bid round held in August 2005, a bidding group comprising 
ONGC Videsh Ltd ("ONGC"), Equator and OWEL E&P Ltd ("OWEL"), submitted the 
winning bids for the Oil Prospecting Licences ("OPLs") for blocks 321 and 323. 
The bids included signature bonuses totaling US$485 million. However, the Korean 
National Oil Corporation ("KNOC") exercised a right of first refusal granted to 
it in recognition of a commitment by KNOC to implement a downstream project. 
After discussion among all parties, KNOC was awarded a 60% interest in the 
blocks and appointed as operator. A 30% interest was awarded to the ONGC group 
while the remaining 10% was awarded to Local Content Vehicles ("LCVs") - Tulip 
Energy Resources Nigeria Limited for OPL 321 and NJ Exploration Limited for OPL 
323. ONGC declined its part of the award, allowing Equator to take the allocated 
share.  The Government of Nigeria and KNOC consented to this and Equator made 
payment to the Nigerian Government of a full one-third share of the signature 
bonuses totaling US$161.7 million. On 10 March 2006, Equator signed the two 
Production Sharing Contracts with the Nigerian National Petroleum Corporation 
and the other parties as a full independent party with a 30 per cent interest. 
 The Company also signed the Joint Operating Agreements with the other 
participants on 7 June 2007. Since March 2006, Equator has participated fully 
with the other parties in all of the technical and commercial decisions related 
to the detailed evaluation of the hydrocarbon prospects and in the preparations 
for drilling. 
 
 
UPDATE 
 
 
The Company has recently been informed by the Ministry of Energy of a decision 
made by the President of Nigeria to void the allocation of the blocks to KNOC 
and to restore the status of the ONGC Consortium as the winning bidder, subject 
to their payment in full of the US$485 million signature bonus within 60 days of 
6 January 2009.KNOC and ONGC have confirmed to the Company that they have 
received letters from the Ministry of Energy to this effect. We understand that 
the basis of the decision is the non-payment by KNOC of the signature bonus 
offered by the winning bidder in full and that the portion of the signature 
bonus paid by KNOC will be refunded forthwith. 
 
 
As stated above, Equator did pay its portion of the signature bonuses in full. 
Equator has received verbal assurances from the Ministry that its participating 
interest in the two PSCs is unaffected by the decision to void KNOC's allocation 
but to date has received no direct written communication. The directors continue 
to believe that the Company's interest in the OPLs remains intact and that 
Equator will have the right either to participate with the ONGC Consortium in a 
new PSC or to have its signature bonus refunded. 
 
 
In order to protect its investment to date of US$16 million in petroleum 
operations, Equator is working with KNOC, ONGC and all LCV partners to ensure 
that the preparation for drilling operations continues with the minimum of 
disruption. The Company will continue to keep shareholders and the markets 
informed of events. 
 
 
 
Enquiries: 
 
 
+------------------------------------+------------------------------------+ 
| Equator                            |                [phone] | 
+------------------------------------+------------------------------------+ 
| Philip Rand                        |                                    | 
+------------------------------------+------------------------------------+ 
| CEO/CFO                            |                                    | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Beaumont Cornish                   |                [phone] | 
| Limited (Nominated Adviser to      |                                    | 
| Equator)                           |                                    | 
+------------------------------------+------------------------------------+ 
| Roland Cornish                     |                                    | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Fox-Davies Capital Limited (Broker |                [phone] | 
| to Equator)                        |                                    | 
+------------------------------------+------------------------------------+ 
| Daniel Fox-Davies                  |                                    | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
| Buchanan Communications            |                [phone] | 
+------------------------------------+------------------------------------+ 
| Bobby Morse/Ben Willey             |                                    | 
+------------------------------------+------------------------------------+ 
|                                    |                                    | 
+------------------------------------+------------------------------------+ 
 
 
Additional information regarding the Company can be obtained from the Company's 
website. The Company's website can be accessed at www.equatorexploration.com. 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
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