MX Oil agreed to invest in an indirect, non-operated 5% revenue interest in the OML 113 license, offshore Nigeria, which includes the Aje field, a substantial development stage project with proven, flow tested discoveries where production is expected by January 2016.
In addition, the company announces the issue of 133,333,333 new ordinary shares via a placing at 4.5p per share to raise an estimated US$9.3 million (£6 million) before expenses to provide additional working capital and funding for future capital expenditure and investment.
The interest in OML 113 is currently held by Jacka Resources through wholly owned subsidiaries. This investment right enables MX Oil to continue to fund the asset holding company in place of Jacka, which, if funded in full to commercial oil production, would result in MX Oil having the economic benefit of Jacka’s interest in OML 113.
In consideration for acquiring the exclusive right to fund the asset holding company in place of Jacka, and subject to the spudding of the next Aje production well, a payment of US$800,000 will be due to Cornhill Asset Management. A further $1 million will be payable on the commercial production of hydrocarbons from the Aje field.
OML 113 covers an area of 835sq km offshore Nigeria close to the Benin border and holds the Aje field as well as a number of exploration prospects. Aje, which was discovered in 1997, has multiple oil, gas and gas condensate reservoirs in the Turonian, Cenomanian and Albian sandstones, similar to the producing Jubilee field offshore Ghana. To date four wells have been drilled: Aje-1 and Aje-2 both flow tested oil and gas condensate at high rates, while Aje-4 intersected significant pay in four productive reservoirs.
The Aje field development plan (FDP) involves a three phase development program. Phase 1 will focus on the Aje Cenomanian oil reservoir and include the drilling of two subsea wells and a leased Floating Production Storage and Offloading vessel (FPSO). Initial Production of 41° API oil from these two wells is estimated at 11,000 b/d and is due to commence by January 2016. Phase 2 of the FDP will see two further wells drilled which is expected to increase total Cenomanian oil production to 19,000 b/d. Phase 3, which will target the development of the Turonian gas condensate reservoir, is currently in the planning stage. Phase 1 is underway with works on the FPSO and subsea equipment on-going. Drilling of the new well is on course to commence in the near term 2015, after which production equipment will be installed, ahead of first oil, by year end.
In tandem with the development of the field, work is on-going to interpret the newly acquired 3-D seismic data. This new data will be used for planning Phases 2 and 3 on Aje and also to fully evaluate the exploration potential over the whole of the OML 113 license, including the syn-rift exploration play that has been significantly de-risked following the 2013 Ogo discovery on contiguous block OPL 310.