Afren, Oriental expand interests in Ebok area

Offshore staff

LONDON -- Afren, Oriental Energy Resources and Energy Equity Resources (EER) have are teaming up to explore and develop the OML 115 concession off southeast Nigeria. The permit is adjacent to the Ebok and Okwok development area where Afren and Oriental are already in partnership.

Under the terms of the farm-in agreement with EER, Afren will acquire a 32.5% interest in the license as Technical Advisor for an up-front cash cost of $6 million, including signature bonus and license extension fees. Eventually, Afren’s effective economic interest will be between 32.5 and 40.625% of field revenues. Afren will fund drilling of one exploration well on the license at an estimated cost of $30 million, which could spud in the second half of 2010.

After farming into the Oriental-operated Ebok field concession in March 2008, the two companies agreed to pursue other opportunities in the region. This led to the Okwok field farm-in in August 2009.

OML 115 is in the prolific offshore eastern Niger Delta, also close to the Zafiro complex offshore Equatorial Guinea. The southern portion of the Okwok structure, Okwok South, extends into OML 115. Afren says further prospectivity has been delineated within the channelized Qua Iboe system. It estimates a potential gross un-risked resource of 270 MMbbl.

In the near-term, the partners plan to conduct detailed sub-surface technical studies to determine a location for the exploration or appraisal well later this year.

Following recent appraisal drilling on the Ebok field, Afren has confirmed a 116 MMbbl development with upside to 182 MMbbl, rising to 304 MMbbl with Okwok included. Afren/Oriental also see potential for a production hub around a joint Ebok/Okwok/ OML115 development. This would offer cost synergies including joint storage and export operations and shared services.

01/28/2010



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