Seplat Takes Over Operatorship of OML 53 And OML 55

Seplat Petroleum Development Company Plc (“Seplat” or the “Company”), a leading Nigerian indigenous oil and gas company listed on both the Nigeria Stock Exchange and London Stock Exchange, today announces that the Supreme Court of Nigeria has delivered its judgement in favour of Seplat and Chevron Nigeria Limited (“CNL”) in a litigation brought against both parties by Brittania-U Nigeria Limited (“Brittania-U) that had to date prevented the full transfer to Seplat of a 40.00% working interest in OML 53 and effective 22.5% working interest in OML 55 (held through 56.25% ownership of the share capital of Belemaoil Producing Limited) that the Company had acquired from CNL in February 2015.

“We are naturally very pleased with today’s ruling, not least because it means we are now free to deploy our proven operating expertise to realise the significant reserve, production and value potential these blocks hold.  To give an idea of scale, we estimate these blocks to hold recoverable volumes of around 200 million barrels of oil equivalent net to Seplat, a material volume by any standard and one which has now been unlocked for us,” said Austin Avuru, Seplat’s Chief Executive Officer.  “OML 53 fits neatly within our strategy of securing, commercialising and monetising natural gas in the Niger Delta to supply the rapidly growing domestic market and will further reinforce our position as a preeminent supplier of gas in Nigeria.  OML 55 provides us with a number of attractive opportunities to boost oil and gas output, and is consistent with our strategy of prioritising assets that offer near-term production growth, cash-flow and reserve replacement potential in the onshore and shallow water offshore areas of Nigeria,” he added.

Background

On 5 February 2015 the Company announced that it had acquired a 40.00% working interest in OML 53 from CNL.  Simultaneously the Company also announced that it had concluded negotiations to purchase 56.25% of the share capital of Belemaoil Producing Limited (“Belemaoil”), a Nigerian special purpose vehicle that had completed the acquisition of a 40.00% interest in the producing OML 55, also from CNL.  Seplat’s effective working interest in OML 55 as a result of the acquisition is 22.50%.  NNPC holds the remaining 60.00% interest in both OML 53 and OML 55 and, pursuant to the Joint Operating Model, Seplat was designated operator of OML 53 and OML 55 (together the “Assets”).

However, the full completion and transfer of these assets and operatorship was hindered by a litigation brought against CNL and Seplat by Brittania-U, one of the counter bidders that also sought to acquire the assets from CNL and contested the outcome of the sales process.  The litigation reached the Supreme Court, the apex court in Nigeria, following an appeal brought by Brittania-U against the judgment of the Court of Appeal in Nigeria. The Court of Appeal decision delivered on 20 June 2014 set aside the ruling of the lower court which had extended an ex-parte order of interim injunction obtained by Brittania-U at the commencement of the action.  Brittannia-U had also sought the order of the Supreme Court for an interlocutory injunction restraining CNL and Seplat from proceeding with the sale and transfer of the Assets, until the determination of the appeal by the Supreme Court.

The Supreme Court has today delivered its judgement and ruled in favour of CNL and Seplat.  This ruling allows CNL to conclude the full transfer and operatorship of the Assets to Seplat with immediate effect.

OML 53

OML 53 covers an area of approximately 1,585km² and is located onshore in the north eastern Niger Delta.  The block contains the large undeveloped Ohaji South gas and condensate field, the development of which will be co-ordinated with the Shell Petroleum Development Company of Nigeria (“SPDC”) operated Assa North field on adjacent OML 21, together referred to as the ANOS project.  The expectation is that future gas production from the ANOS project will supply the domestic market, for which significant work on commercialisation terms and development concepts has already been undertaken.   The block also holds the Jisike oil field, located in the north western area of the block, which is currently the only producing field on OML 53.   Gross production from Jisike in 2015 averaged 1,715 bopd (686 bopd on a 40.00% working interest basis).  Existing infrastructure Jisike comprises flow-lines, phase one separation facilities and a flow station with a design capacity of 12,000 bopd and 8 MMscfd.  Oil production is then sent for further processing at the nearby Izombe facilities on OML 124 from where it is exported via pipeline to the Brass oil terminal.  There is also shallow oil development potential at Ohaji South that could be pursued as a separate standalone project in the near term.

The Company estimates net recoverable hydrocarbon volumes attributable to its 40.00% working interest to be approximately 51 MMbbls of oil and condensate and 611 Bscf of gas (total 151 MMboe).

OML 55

OML 55 covers an area of approximately 840km² and is located in the swamp to shallow water offshore areas in the south eastern Niger Delta.  The block contains five producing fields (Robertkiri, Inda, Belema North, Idama and Jokka).  The majority of production on the block is from the Robertkiri, Idama and Inda fields.  The Robertkiri field is located in swamp at a water depth of five metres and has a production platform and utility platform installed.  Production capacity at the Robertkiri facilities is 20,000 bpd and 10 MMscfd.  Production facilities at the Idama field comprise a jack-up mobile offshore production unit (“MOPU”) and riser platform that have a capacity of 30,000 bpd of total fluids and 34 MMscfd.  The Jokka field is produced through a manifold tied-back to the Idama facilities.  Production facilities at the Inda field comprise a MOPU with a capacity of 30,000 bpd of total liquids and 34 MMscfd.  Overall, the infrastructure on OML 55 comprises four flow-stations, a network of flow-lines and two eight-inch pipelines that connect to third party operated infrastructure.  The Belema field is unitised with OML 25 and is produced via a flow-station on that block.  All produced liquids from OML 55 are delivered via third party infrastructure to the Bonny terminal for processing and shipping.  In addition to the oil potential on the block there is also an opportunity to develop the significant gas resources that have also been identified. Gross production from OML 55 in 2015 averaged 7,746 bopd (1,743 bopd on a 22.50% effective working interest basis).

The Company estimates net recoverable hydrocarbon volumes attributable to its 22.50% effective working interest to be approximately 20 MMbbls of oil and condensate and 156 Bscf of gas (total 46 MMboe).