AFR.L Regulatory News (AFR)

1 Jun 2006 07:01

Afren PLC01 June 2006 Afren plc Afren signs agreement for the development of the Okoro and Setu Fields in OML 112, offshore Nigeria and agrees a US$50 million financing facility Afren PLC ("Afren"), an independent oil and gas company focused on establishingitself as the leading pan-African exploration and production company, announcesthe signature of a Financing and Production Sharing and Technical ServicesAgreement with Amni International Petroleum Development Company Limited ("Amni")for participation in the development of the Okoro Field ("Okoro") and Setu Field("Setu"), offshore Nigeria. Okoro and Setu are undeveloped oil and gas fields located in Oil Mining Lease112 ("OML 112") in shallow water offshore Nigeria, which were originally awardedto Amni in 1993 as part of the Nigerian government's indigenous licensingprogram. The fields have combined estimated recoverable reserves of 30 to 60mmbbls and are expected to flow in excess of 15,000 bopd when full combinedproduction is achieved. Appraisal and development drilling will commence in Q32006, facilities will be installed to tie-in to the existing localinfrastructure and first production is due to commence in 2008. Under the terms of the Agreement, Afren will finance the development andappraisal programme. This will be part financed through the facility outlinedbelow. On production, Afren will recover these costs, from over 90 percent ofthe barrels produced net of operating costs and royalties. Following costrecovery Afren and Amni will share the production. Okoro Field Two wells were drilled on Okoro in the 1970s. The first well discovered oil intwo sands and the follow-up appraisal well confirmed the presence of bothreservoir sands. The field is covered by good quality 3D seismic data which wasacquired by Mobil Corporation. It is anticipated that an appraisal well will be drilled on Okoro in Q3 2006with up to five development wells to be drilled in 2007 and facilitiesinstalled, ahead of the commencement of production in 2008. Setu Field Amni drilled a well on Setu in 2002 which discovered oil across five reservoirsands. All the zones were tested and flowed at rates between 1,500 bopd and3,500 bopd. The field is covered by good quality 3D seismic data which wasacquired by Shell. It is expected that a further appraisal well will be drilled in Setu in 2007 andin 2008 two development wells will be drilled and facilities installed ahead ofproduction starting up in 2009. US$50 million Financing Facility Afren also has reached terms regarding financing for the development of theOkoro and Setu fields. The financing is subject to final documentation andcustomary diligence. Afren Drilling Activity Update As part of our ongoing review of Nigerian operations and activities, Afren hasdecided to concentrate its future activity in the Niger Delta on the Okoro andSetu Fields in OML 112, and on the Ogedeh Field in OML 90. Afren, in conjunctionwith Bicta Management Services Ltd, expects to drill an appraisal well on theOgedeh Field in the third quarter of 2006. Thereafter, the Seadrill-7 DrillingRig will drill an appraisal well on the Okoru Field in OML 112. Afternegotiations with Sogenal on the Akepo discovery in OML 90, the parties did notreach agreement on terms for the development of the field, and Afren will notproceed with the planned development of that asset. Brian O'Cathain, Chief Executive of Afren commented: "We are delighted to announce another partnership with a well establishedindigenous company in the development of proven undeveloped fields offshoreNigeria, which follows the announcement on 30th May regarding the Obo-1discovery on Block 1 of the Nigeria Sao Tome and Principe Joint DevelopmentZone. This important transaction significantly upgrades Afren's near termdevelopment and production opportunities. We are on track for early productionin 2007 and our target of 15,000 to 20,000 bopd of production in 2008. The proceeds from the financing facility announced today will help ensure thesuccessful execution of our near term development opportunities." 1 June 2006 Enquiries: Afren +44 20 7182 1800Brian O'Cathain boc@afren.comOsman Shahenshah os@afren.com Pelham Public Relations +44 020 7743 6673James Henderson james.henderson@pelhampr.comAlisdair Haythornthwaite alisdair.haythornthwaite@pelhampr.com Afren is an independent oil and gas exploration, development and productioncompany, established in 2004 to build an attractive, diversified and balancedportfolio of African assets, with an initial focus on the Gulf of Guinea region.Afren's corporate objective is "Capital appreciation for shareholders throughpreferential access to oil and gas production and exploration acreageacquisition, production growth, deal flow and exploration drilling in Africa." This information is provided by RNS The company news service from the London Stock Exchange