Liberia: Canadian Overseas to acquire Block 13

By OGJ editors
– Canadian Overseas Petroleum Ltd., Calgary, plans to acquire a 100% interest in Block LB-13 off Liberia from Peppercoast Petroleum PLC.

Consideration is $85 million. The transaction is to close by June 30 assuming certain conditions are satisfied and consent is obtained from National Oil Co. of Liberia.

Canadian Overseas will also acquire 2,200 sq km of 3D seismic that was shot for Peppercoast in the first quarter of 2010. The block covers 2,400 sq km (see map, OGJ, May 2, 2011, p. 66).

The production sharing contract is an 8-year license that took effect in May 2007. It is divided into phases of 4 years, 2 years, and 2 years, respectively. The second and third phases of the PSC require the drilling of a well in each phase. The second phase is to commence on May 23, 2011.

In addition to the agreed purchase price, Canadian Overseas has loaned $15 million on a secured basis to Peppercoast in order for Peppercoast to satisfy an account payable to TGS-NOPEC Geophysical Co. The funds pay for acquisition and processing of the 3D survey and should also satisfy Peppercoast’s work obligations under the PSC’s first phase.

Canadian Overseas has identified Cretaceous turbidite sand stratigraphic traps on LB-13 analogous to the Paleocene drilling targets the company is pursuing in the UK Central North Sea. It has identified a number of drilling prospects on the block with strong AVO anomalies and other direct hydrocarbon indicators that may suggest the presence of hydrocarbons.

The company plans to drill the strongest of the prospects starting in the first quarter of 2012 to meet its obligations under the second phase of the PSC. Several companies have announced intentions to begin drilling in deep water off Liberian in the second half of 2011, specifically in Blocks 8, 9, and 15.

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