Sirius Petroleum PLC Ororo Field Rig Mobilisation - COSL Force (3773H)

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RNS Number : 3773H

Sirius Petroleum PLC

12 March 2018

12 March 2018

Sirius Petroleum Plc

("Sirius" or "the Company")

Ororo Field - Operational Update

Mobilisation of Rig for Ororo Field Drilling Program

Sirius Petroleum (AIM: SRSP), the Nigeria focused oil and gas development and production company, is pleased to announce that the Company's international rig partner COSL has now received preliminary Location Approval from the Marine Warranty Surveyor for the Ororo-2 and Ororo-3 wells and has commenced mobilisation of the jack-up rig for delivery direct to Nigeria.

Furthermore, COSL have optimised the drilling campaign for Sirius by electing to deploy the COSL Force jack-up rig as opposed to the COSL Power. The COSL Force is a "hot rig" (tooled-up and ready to operate) currently offshore UAE and is therefore ready to be mobilised to Nigeria shortly. The COSL Force is a new-build state of the art rig which has a rated operating water depth of 375 ft and a rated drilling depth of 30,000 ft.

Once on station, it is anticipated, weather conditions permitting, that drilling of the Ororo-2 well will now commence in April 2018 and that drilling will be in a location close to the Ororo-1 well (originally successfully drilled by Chevron in 1986).

The Ororo-2 well is planned to penetrate all of the D sands, with the top three sands (D1, D2 and D3) being sampled and pressure tested. The objectives of the tests are to determine gas-oil contacts, the pressure regimes, fluid compositions, and in-situ gas-oil ratios ahead of an extended well test. The well will then be drilled down to the deeper G sands where it is expected to be completed for production.

According to the Ororo CPR produced by Rockflow Resources ("Rockflow") and set out in the Company's admission document, it is estimated that the Ororo-2 well will initially produce approximately 2,700bopd of light oil and 6mmcfd of gas. Rockflow estimates that the Ororo asset has a Mid Case Net Present Value to Sirius (NPV10) of $96m, based on a $65 per barrel flat real oil price for the life of the field.

In addition, Sirius has concluded amended terms with COSL for the COSL Force jack-up rig, extending the initial program to cover both the Ororo 2 and Ororo 3 drill programs for a lump sum of $9m (payable in instalments related to drilling milestones), on the assumption that the duration of the work will not exceed 90 days from the spud of the first well in the program and assumes a 45 day work duration per well. If the duration of the work exceeds that period, then daily rates will thereafter apply. In accordance with the amended agreement, Sirius has made an initial deposit payment of $1.5m to COSL.

Commenting, Bobo Kuti, Chief Executive, said: "We are delighted to be informed that COSL has finally secured the confirmation from the Marine Warranty Surveyor of the acceptance of the surface location of Ororo-2 and Ororo-3 wells enabling us to announce the mobilisation of the COSL Force jack-up rig. This is a milestone for Sirius as we embark with our operational partners on the first of our drilling programs. We are delighted to be working alongside COSL as our rig partners and thank them for the excellent work they have done on mobilisation and we look forward to the commencement of the well campaign operations on Ororo-2 in the coming months."

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). Upon the publication of this announcement via Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

Ends

Enquiries:

   Sirius Petroleum                                                        [phone] 

Bobo Kuti, Chief Executive

Mark Henderson, Chief Financial Officer

   Cantor Fitzgerald Europe                                         [phone] 

David Porter/Nick Tulloch

   Gable Communications                                             [phone] 

John Bick [e-mail]

Sirius Petroleum's Strategy and the Ororo Field

The Company's strategy is to target proven opportunities and maximize hydrocarbon production and recovery through the acquisition of discovered assets in Nigeria, with a particular focus on shallow water offshore areas and realise upside potential through appraisal activities.

Sirius's initial focus is the Ororo field, which was originally operated by Chevron in 1986. Chevron drilled Ororo-1 and hydrocarbons were discovered in seven sandstone reservoirs (D1 to D5, F and G). Four of the reservoirs in the original Ororo-1 well were tested, two produced oil (D3 and G) at a combined rate of 2,800 bopd and two produced gas condensate (D4 and D5).

The Ororo field is located within OML 95 in the Niger Delta, offshore Nigeria, in the western part of the prolific Niger Delta petroleum system. It lies in shallow waters offshore Ondo State in water depths ranging between 23ft and 27ft. The field is adjacent to the Mina, West Isan, Ewan, Eko and Parabe fields, all of which are operated by Chevron.

Sirius has a 40% economic interest under a Financial & Technical Service Agreement and entered into a Joint Operating Agreement ('JOA') in August 2017 with its indigenous partners Owena Oil & Gas (100% state owned entity) and Guarantee Petroleum, who own 27% and 33% respectively. According to the Ororo CPR, the mid-case gross recoverable 2C contingent resources are 24 mmboe.

Sirius has agreed innovative funding and operating partnerships with global industry leaders to execute the drilling campaign to first oil. The initial Ororo-2 well program aims at delivering an initial production of 2,700 bopd in H1 2018.

Ororo economic evaluations produced by Rockflow subsequent to issue of the CPR:

 
 Oil Price   Gross      Gross      Gross      Sirius     Sirius     Sirius 
              Project    Project    Project    Project    Project    Project 
              NPV10      NPV10      NPV10      NPV10      NPV10      NPV10 
              US$        US$        US$        US$        US$        US$ 
              MM Low     MM Mid     MM High    MM Low     MM Med     MM High 
----------  ---------  ---------  ---------  ---------  ---------  --------- 
    65          126.5      279.4      695.2       32.9       96.1      274.3 
----------  ---------  ---------  ---------  ---------  ---------  --------- 
    70          144.6      309.1      756.9       40.9      108.9      300.9 
----------  ---------  ---------  ---------  ---------  ---------  --------- 
 

Gas BOE conversion factor: 1 barrel of oil equivalent = 5800 cu ft gas

*Under SPE Guidelines, the hydrocarbons are classified as Contingent Resources and will convert into Reserves upon finalisation of approvals and agreements with contractors. The valuation methodology used by Rockflow provides for the commercial producible resources to be defined rather than the technically producible oil. Under the present oil price scenario this results in a modest change for the tail end volumes in relation to the volumetrics reported on 2(nd) June 2017

Review by Competent Person

In accordance with the guidelines of the AIM Market of the London Stock Exchange, the technical information contained in this announcement has been reviewed and approved by Tom Gunningham MA(Oxon) CEng MEI, a chartered petroleum engineer and reserves auditor for Rockflow Resources, who has over 27 years industry experience and meets the criteria of a qualified person under the AIM guidance note for mining and oil and gas companies.

 
 Glossary 
 Bopd:        barrels of oil per day 
 Mmboe:       million barrels of oil equivalent 
 Contingent   Resources estimated at a certain 
  resource:    date as potentially recoverable 
               from known accumulations, but which 
               are not currently considered commercially 
               recoverable 
 2C:          Proved and Probable Contingent Resources 
 

This information is provided by RNS

The company news service from the London Stock Exchange

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March 12, 2018 03:30 ET (07:30 GMT)