Sirius Petroleum entered into a financed drilling contract with COSL Drilling Pan-Pacific Ltd. (COSL), for the provision of a high specification jackup rig that will be utilized to drill a multi well campaign as part of its shallow water development strategy in Nigeria at the Ororo project, set to start in 1H 2017.
Under the terms of the contract, COSL will extend delayed invoice and payment terms to Sirius which will have the effect, dependent on successful drilling, of deferring a significant portion of the cost of the rig until after the company starts the production of hydrocarbons, but is otherwise on normal industry terms.
The contract envisages a drilling program on the Ororo Field and could be expanded to include other potential offshore assets.
Sirius intends to announce further details regarding the final elements of the financing and operational service agreements, including the joint operating agreement, to support its proposed drilling program for Ororo.
Independent petroleum consultants, Rockflow Resources recently produced a competent persons report on the Ororo field attributing 2C contingent resources, net to Sirius, of 11.5 MMboe. Rockflow calculated a NPV10 valuation of over US$49 million, net to Sirius, at a flat, real Brent price of $50/bbl and flat, real gas price of $3.50/MMcf.
"We are delighted to have secured this highly competitive, vendor financed rig contract with COSL, one of the world's leading oilfield service companies. This innovative financing solution affirms our belief in the quality of the Ororo field and our confidence in achieving first hydrocarbons in 1H 2017,” Bobo Kuti, CEO of Sirius said. “We look forward to working with COSL and our other project partners to commence the development of our interests in Nigeria."
"We are excited to work in collaboration with Sirius Petroleum to enable the company to reach first oil,” Chris Shea, COSL group director of marketing said. “It is important for oil service providers and operators to pool their resources and strengths making operations more efficient and cost effective thereby creating value for both parties."
Read more: