Canadian Overseas Petroleum Ltd.
(COPL) (TSX: V.XOP
, Stock Forum
) aims this year to de-risk the West Africa Transform Margin in collaboration with operator Exxon Mobil Corp.
, Stock Forum
), using Liberia as a launch pad to enter Nigerian waters, “where the surface has only just been scratched”, said chief executive Arthur Millholland.
Already listed in Toronto, Calgary-headquartered COPL has added a listing on the London Stock Exchange, raising money to pursue exploration commitments in Block LB-13 off Liberia where it successfully farmed out an 83% operating stake to ExxonMobil, retaining 17%.
“We’re carried through on all costs until ExxonMobil spends $120 million gross, so we think that’s more than just a one-well carry and possibly two,” Millholland said.
Millholland is closely watching Chevron’s wildcatting campaign in neighbouring Block LB-12 where the first of two probes, Goshtern-1, is being drilled by Seadrill’s drillship West Tellus, targeting a similar play to LB-13.
Chevron expects results by the end of June and plans another tighthole this year, which Millholland believes will vindicate COPL’s faith in the fairway.
He said: “Both blocks harbour turbidite channel fan complexes in a sedimentary play running southeast towards African Petroleum’s acreage (blocks 8 and 9) but it’s much thicker at our end.”
He said that large primary targets are lined up “like a string of pearls”, running north-east to south-west through the blocks, “but the younger channels cut across to Chevron’s block — they are Maastrichtian in age”.
COPL and ExxonMobil will spud a probe this year targeting a deepwater Cretaceous-Lower Campanian fan complex in 6000 feet of water.
Millholland said this structure is “more of a complex than a single zone prospect and we’ve identified lots of big prospects from existing 3D seismic”.
Under the renegotiated PSC, agreed a year ago, the ExxonMobil-COPL deal demands one well in the first three-year period, but 25% of the block must be relinquished in April 2016.
Contrary to civil society demands made last month during law reform consultations in Monrovia, the LB-13 PSC does not require indigenous corporate participation but stipulates a 5% production revenue share built in to the model contract under which funds flow into a dedicated sovereign vehicle whose shares are owned by the government.
Meanwhile, in Nigeria, COPL has teamed up with several indigenous consortia targeting marginal fields under a round announced last December which Millholland believes will proceed this year.
COPL has an option to take 40% equity in a PSC off the Niger Delta with an indigenous operating player for OPL 2010, granted in the 2007 licensing exercise with no requirement for participation by the Nigerian National Petroleum Corporation.
Located south of Port Harcourt, OPL 2010 was drilled by Elf in the 1980s and then reallocated to Global Energy subsidiary GEC Petroleum Development, owned by entrepreneur Joe Obiago.
“Our technical team is running some very sophisticated amplitude versus offset techniques like those applied to the North Sea when I was chief executive of Oilexco,” Millholland said.
“Offshore Nigeria is looking like the Gulf of Mexico back in the 1980s and I’m very optimistic about OPL 2010.”
Disclosure: Canadian Overseas Petroleum is a Stockhouse client.
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