Canadian Overseas Petroleum refinanced and carried on drilling at OPL 226

What it owns


COPL’s affiliate ShoreCan owns its interest in the OPL 226 licence offshore Nigeria.


An agreement in June saw ShoreCan transfer 70% of its stake in Essar Nigeria to Essar Mauritius in return for an end to the legal action brought by the Indian conglomerate.


Essar Nigeria’s sole asset is a 100% interest and operatorship of OPL 226, which lies 50 kilometres offshore in the central area of the Niger Delta.


Through the agreement, Essar Mauritius will grant Shorecan a 10% carried interest (capped at US$5mln net) on all costs relating to the drilling of a first appraisal well at OPL 226.


Essar Nigeria will also now seek an extension of the production sharing contract for OPL 226 beyond the current term that ends on September 30.


OPL 226 is located about 50 kilometres offshore in the central area of the Niger Delta, has an area of 1530 sq km and is situated in water depths ranging from 40m to 80m.


Historically, five wells have been drilled, with the first oil discovery on the Block made in 2001 in the fifth well (Noa-1) after earlier drilling encountered predominantly gas-bearing sands.


How It’s doing


COPL’s share price has rocketed since the junior oiler reached a settlement in principle with partner Essar in their dispute over OPL 226 , with the company now carried on an appraisal well.


The company has also refinanced itself through two placings to raise GBP1.2mln in addition to a US$2mln equity funding facility.


What the boss says


“The attractiveness of working offshore Nigeria is that its home to some of the best reservoirs in the world, so the economics are very good,” Arthur Millholland, chief executive


Inflexion points


  • Short-term finance arranged
  • Appraisal work starts at OPL 226
  • Finance partner is found and terms agreed

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