It will be recalled that sometime in the year 2003 the Bayelsa State Government bided and got an award of Oml 46 and got the oil prospecting licence for the ATALA OIL field which is situated at southern ijaw local government Area in Bayelsa State.
Upon the success and given the technical expertise needed to explore and prospect for oil deposits, the state government through its state oil company entered into a technical and business agreement with Century oil services , an indigenous oil servicing and prospecting company with over a span of fifteen years in the oil industry with a proven track record of efficiency in service delivery.
The joint venture operating agreement which was entered in 2012 has the State Government represented by the State oil Company , Hardy oil Nigeria limited and Century Exploration and Production limited . This agreement places an obligations on both the partners with a greater service delivery on the Century to wit ; it will prospect and exploit the oil deposits in the said ATALA oil field.
The Company wasted no time and indulged technical expertise and after spending over a whopping 100 million dollars began the exploration and sale of oil. This came with so much hiccups which were expected clogs in the wheel of progress in oil related ventures.
At present Century has done very well in accordance with its mandate under the joint operating agreement meeting its obligations.
The Bayelsa State oil company which had a sudden change of leadership has a new managing director in person of Dorgu Ebi.
The company which is the eye and representative of the state government is expected among other things to liaise effectively towards the success of the agreement and do all that is needed towards the efficient and effective exploration of the JVC .
But suddenly the management of the Bayelsa State oil Company under its new manager is attempting to frustrate the entire efforts of the technical partners under the JVC. The manager has began an illicit invitation to business concerns to buy over the equity of century in the ATALA oil field which is presently under a chain legally binding contractual agreement.
This he has done by placing this NOTICE;
Anderson & Dake Proprietary
Atala Field (OML 46)
• Atala is located in the mangrove swamp of western Bayelsa State, close to Shell operated Tunu-Kanbo fields
• It was awarded to Bayelsa Oil Co (100%) during 2003 Marginal field bid round
• Current ownership: Bayelsa Oil: 45%, Century E&P Ltd: 35%* & Hardy Oil Nigeria: 20%. *Although a farm-in agreement was executed with Century in Jan 2012, Century did not pay the farm-in fee, hence no request for transfer of interest was submitted by BOCL.
• Atala-1 well, penetrated 10 HC bearing reservoirs between 7,500-11,000 ft ss
• 2P Crude reserves: Crude & Cond: 9.0 MMstb & Gas: 390 Bcf
• Atala-1 well was re-entered in Jul ’14 & it tested 2,500 bopd from a single zone. It was completed as a dual string producer
• A 15,000 bpd Early Production Facility (EPF) is on location for processing well production
• Over 180k bbl of crude has been produced, which was evacuation by barging.
• Immediate requirement is $2.5m to settle unpaid contractors invoices incurred • by previous operator to keep production going. Financial Technical Services Agreement (FTSA) with economic interest is planned
• There is 20,000 bbl of 370 API (Bonny Light) crude in storage, available for sale. Potential off taker asked for up to 30% discount. Plan is to produce additional 40k – 45k bbls over 3 weeks @ 1,500 bopd to increase volume to 60k – 65k bbls to generate >$4.2m which will be used to settle bridge facility
• 1 year Offtake Agreement for 500k bbl/year valued at >$32m is being negotiated
Location Map: Atala Field (OML 46)
Integrated Field Development plan (FDP) which includes drilling of 2 oil producers + 1 non-associated gas (NAG) producer has been submitted to the DPR
Upon completion of Ph1 FDP, production is anticipated to increase to 6 – 7kbd of oil + 30 MMscfd of gas. Up to 2kbd of condensate will be stripped from NAG and lean gas will be used for power generation to power Bayelsa State.
Worried and given the contractual expectations under the farm -in joint agreement Century exploration and production through its external solicitors issues the following disclaimer ;
*OML 46 – Disclaimer Notice on behalf of Century Exploration and Production Limited.**
We are solicitors to Century Exploration and Production Limited (hereafter referred to as “our Client” or “CEPL”).
We have been instructed by CEPL to issue this disclaimer in response to rumours currently circulating in the oil and gas space regarding their participation in the Atala Marginal Field (OML 46). As we understand it, the story is that CEPL’s equity interest in OML 46 is under review or about to be terminated or resold.
Our Client disclaims and refutes all such rumours and categorically states as follows:
1. CEPL continues to participate in OML 46 as per the terms of the farm-in agreement between it and Bayelsa Oil Company Limited (BOCL) including the addenda to the farm-in agreement and the Joint Operating Agreement (JOA) of OML 46 participants.
2. Under the JOA between BOCL, Hardy Oil Nigeria Ltd (Hardy) and CEPL (OML 46 participants), CEPL is the designated service provider . Together with BOCL, CEPL is responsible for petroleum operations on OML 46.
3. Under both the farm-in agreement and the JOA, CEPL has fulfilled its financial obligations carrying BOCL’s 51% participating interest in OML 46 until pay-out, effectively bringing CEPL’s working interest in OML 46 to 80%.
4. CEPL Is willing and capable to meet its technical and financial commitments for OML 46.
5. CEPL has committed massive resources to OML 46 and will continue to fulfil its obligations.
6. Production has commenced on OML 46 as a result of the efforts of CEPL.
7. CEPL’s equity interest in OML 46 will last for the duration of the original farm-out agreement between NNPC, Shell and BOCL.
8. CEPL does not intend to divest its interest in OML 46, now or in the foreseeable future.
9. There is no dispute, nor are there circumstances that warrant the inference that CEPL may divest its equity interests in OML 46.
10. Anybody acting upon these rumours does so at his own peril.
Further to the above, the public is put on notice that CEPL’s interest in OML 46 is not for sale. Anyone or persons peddling such mischievous rumours are clearly out to mislead and profit off unsuspecting individuals and companies. You have been warned.
*Legal Answers LLP*
The above scenario leaves much to be desired as the obligations under the joint venture agreement is clear and binding and nothing has arisen to warrant such bold face attempts to frustrate the already successful farm in agreement which has seen the first sale of crude from the ATALA field by its technical partners the century exploration and production .
But by far the most worrisome is the SILENCE OF THE BAYELSA STATE GOVERNMENT which is the parent and supervisory organ of the state oil company which has been properly briefed on the clear legal moral and business implications of the inordinate actions of the managing Director of the Bayelsa State oil company.
Whether this action is premised by lack of cognate business experience in this rear field of oil exploration or a deliberate attempt to undermine the huge financial investment on the ATALA oil field by its technical partners is yet to be affirmed.
But what is even more morally reprehensible is the fact that the attempt to deliberately remove a successful indigenous oil prospecting and production company which has done so much in terms of ameliorating the harsh effects of unemployment and bridging the youthful ijaw unemployment gap by employing employable indigenous graduates from the state leaves much to be desired.
The state government must understand that beyound the effects of the legal chains it will bind itself should it attempt to pursue that route it will be a great disservice to the patriotic youths of Ijaw extraction to attempt in reneging and using any other company given the clear expertise time and resources committed into the success of this OML 46.
It’s pertinent and urgent that the state Government through its appropriate agency or machinery call the state managing Director to order to keep its obligations under the JOA .The implications of this infertile route are too precarious to both the economic and political concerns of the yearnings of the state and beyond . Rather than creating a business conflict the managing Director should concern himself in such productive ventures by assisting the technical partners towards a more robust and far lasting business relationship under the farm in agreement to ensure continues production and Exploration of the ATALA oil field.
Let the silence of the state Government be addressed to restore business confidence in the legally binding business agreement for the complete Sucess of the OML 46 ATALA OIL FIELD.
EBIKEME LLOYD OTORUFA
WRITES FROM WILBERFORCE ISLAND , AMASSOMA.
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