VANCOUVER, BC, Sept. 15, 2021 /CNW/ - (TSX: AOI)
(Nasdaq-Stockholm: AOI) – Africa Oil Corp. ("Africa
Oil", "AOC" or the "Company") is pleased to provide an update for
its Kenya development project
incorporating Blocks 10BB and 13T ("Project Oil Kenya"). PDF
Version
Over the past year, Africa Oil and its JV Partners (Tullow Oil
and Total Energies) have completed the redesign of the Project Oil
Kenya to ensure it is technically, commercially and environmentally
robust. A higher oil production plateau of 120,000 barrels of oil
per day is now planned with expected gross oil recovery of 585
million barrels of oil ("MMbbl") over the life of the
field1. This resource position has been audited by
external independent auditor, Gaffney, Cline & Associates
("GaffneyCline"). Africa Oil's best (2C) development pending
contingent resource on a net working interest basis, derived from
GaffneyCline's report is 93 MMbbl2. The estimated
unrisked3 post-tax net present value, using a 10%
discount rate ("NPV10"), of $577
million is attributable to Africa Oil's net 2C development
pending contingent resource base.
Africa Oil and its JV Partners have presented a draft Field
Development Plan ("FDP") to the Government of Kenya ("GoK") ahead of the plan to submit a
finalised FDP by the end of 2021, in line with licence extension
requirements provided by the GoK in December
2020. Africa Oil and its JV Partners continue to work
collaboratively with the GoK on land and water access and on the
necessary commercial agreement and are waiting on the final
approval of the Environmental and Social Impact Assessment ("ESIA")
from the regulatory authorities.
At the same time Africa Oil and its JV Partners are actively
seeking strategic partners for the project. Based on the revised
plan, Africa Oil believes that this project is an attractive
commercial prospect for investors looking to access the
East Africa oil and gas sector in
both the upstream and midstream. It is intended that a strategic
partner will be secured ahead of a Final Investment Decision
("FID").
Africa Oil President and CEO, Keith
Hill, commented on the statement of resources: "Together
with our JV partners we have made significant progress in
redesigning and optimizing Project Oil Kenya. Compared to the
previous field development plan, we have a more economically robust
project, which I am confident is more attractive to potential new
partners. We will continue to work with our JV partners and the
government of Kenya towards the
final investment decision and I am pleased that our interests are
fully aligned on what is a strategically significant project for
Kenya."
Further Information
The key changes to the development concept have been driven
by:
- Incorporating the production data from the Early Oil Pilot
Scheme ("EOPS") where 450,000 bbls was produced from Amosing and
Ngamia fields. These fields account for approximately 54% of the
resource distribution, leading to greater confidence in achieving
the higher end of the resource distribution range.
- Initially drilling at the crest of the field in the highest
quality reservoirs prior to First Oil and optimizing the number of
wells to improve pressure support to recover larger resources from
the reservoir and to rapidly build up the initial production
plateau.
- Adding an additional discovered field, Ekales, in the first
phase of production as the work has technically matured and the
field is geographically located between the Twiga and Amosing
fields. As such, the first phase will be made up of the Ngamia,
Ekales, Amosing and Twiga ("NEAT") fields.
- Optimising the overall development cost with a facility design
capacity of 130,000 bopd and an increase to the pipeline size from
18" to 20" to handle the increased flow rates.
Total gross capex to First Oil is expected to be c.$3.4 billion, comprised of c.$2.0 billion for the upstream and c.$1.4 billion for the pipeline. This capex
estimate is based on bids and FEED updates from contractors. Capex
to First Oil has increased from the previous project design,
reflecting the increase in resources targeted in the first phase
and the associated increase in wells and infrastructure to achieve
this. Over the life of the field, the revised project has reduced
the overall unit cost to c.$22/bbl
(previously c.$31/bbl). The
combination of the above leads to an optimal project that delivers
more economic barrels within the license period and greater
flexibility to incrementally add additional fields into production
without significant infrastructure modifications.
Africa Oil and its JV Partners have also taken the opportunity
of this review to improve the environmental and social aspects of
the project. Carbon emissions will
be limited through a combination of heat conservation, use of
associated gas for power and reinjection of excess gas into the
reservoir. Further, there are opportunities to use the Kenyan power
grid that is powered by renewables sources and options to offset
remaining emissions. As per the previous development plan, the
pipeline from Turkana to Lamu will be buried and the Turkwell Dam
will supply water for the project and to local communities. This
project would also be Kenya's
first oil & gas development and would represent a stable,
long-term source of income for the GoK.
Simultaneously to the development, an exploration and appraisal
plan will be put in place to ensure the remaining discoveries are
efficiently developed. This will extend and sustain initial plateau
rates whilst keeping costs low by leveraging the rigs used for
development drilling. Future phases will also focus on additional
exploration potential within the 10BB/13T licenses and bringing the
10BA license acreage into production.
Notes:
|
1
|
100% of the volumes
estimated to be recoverable from the project over the life of the
field, in the event that development goes ahead.
|
2
|
Contingent resources
net to AOC are AOC's net working interest fraction of gross
resources, assuming GoK will exercise its back-in rights, leaving
AOC with a 20% share in Block 10BB and a 19.375% share in Block 13T
when a development license is awarded.
|
3
|
The volumes and NPV10
reported here are "unrisked" in the sense that no adjustment has
been made for the risk that the field/project may not be developed
in the form envisaged or not at all.
|
4
|
All dollar amounts in
this press release are U.S. Dollars unless otherwise
indicated.
|
About Africa Oil
Africa Oil Corp. is a Canadian oil and gas company with
producing and development assets in deepwater Nigeria; development assets in Kenya; and an exploration/appraisal portfolio
in Africa and Guyana. The Company is listed on the Toronto
Stock Exchange and on Nasdaq Stockholm under the symbol "AOI".
Additional Information
This information is information that Africa Oil is obliged to
make public pursuant to the EU Market Abuse Regulation. The
information was submitted for publication, through the agency
of the contact persons set out above, at 2:20 a.m. EDT on September
15, 2021.
Advisory Regarding Oil and Gas Information
The contingent resources and related NPV10 estimate presented in
this press release are derived from a report prepared by
GaffneyCline for Africa Oil dated June
2021 and are effective as at 31st December 2020. In the preparation of its report,
GaffneyCline has used definitions contained within the Canadian Oil
and Gas Evaluation Handbook ("COGEH") and National Instrument
("NI") 51-101 Standards of Disclosure for Oil and Gas
Activities.
GaffneyCline's report was prepared using Brent oil price
forecast of ($/bbl): 2021 – 51.38; 2022 – 54.0; 2023 – 57.0; 2024 –
60.0; 2025 onwards – escalation rate of 2.0% per annum. There is no
assurance that the forecast prices will be attained and variances
could be material. The estimates of crude oil, natural gas liquids
and natural gas resources provided herein are estimates only and
there is no guarantee that the estimated resources will be
recovered. Actual crude oil, natural gas and natural gas liquids
resources may be greater than or less than the estimates provided
herein.
Contingent resources are those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations by application of development projects, but
which are not currently considered to be commercially recoverable
owing to one or more contingencies. Contingent resources may
include, for example, projects for which there are currently no
viable markets, where commercial recovery is dependent on
technology under development, where evaluation of the accumulation
is insufficient to clearly assess commerciality, where the
development plan is not yet approved, or where regulatory or social
issues may exist. The specific contingencies related to contingent
resources presented herein are: the approval of the FDP by the GoK
and the FID by the JV Partners, which may be dependent on a
successful farm-out process and securing financing for the upstream
project and the pipeline infrastructure. Contingent resources are
further categorized in accordance with the level of certainty
associated with the estimates and may be sub-classified based on
project maturity and/or characterized by the economic status.
It must be appreciate that the contingent resources reported
herein are unrisked in terms of economic uncertainty and
commerciality. There is no certainty that it will be commercially
viable to produce any portion of the contingent resources.
The expected gross oil recovery of 585 MMbbl in this press
release have been made by Tullow Oil Plc in accordance with their
disclosure obligations. The Company understands such estimates have
been prepared in accordance with the Society of Petroleum Engineers
Petroleum Resources Management System (SPE-PRMS). While the Company
takes no responsibility whatsoever for the resource estimates of
Tullow Oil Plc, the Company believes the SPE-PRMS uses terminology
and categories in a manner that is consistent with the terminology
and categories in the COGE Handbook, has a scientific basis and
requires the estimates of volume and value of resources to be based
on reasonable assumptions. The effective date of the resource
estimates of Tullow Oil Plc is December 31,
2020 and such estimates were prepared by GaffneyCline.
Forward Looking Information
Certain statements and information contained herein constitute
"forward-looking information" (within the meaning of applicable
Canadian securities legislation). Such statements and information
(together, "forward looking statements") relate to future events or
the Company's future performance, business prospects or
opportunities.
All statements other than statements of historical fact may be
forward-looking statements. Statements concerning proven and
probable reserves and resource estimates may also be deemed to
constitute forward-looking statements and reflect conclusions that
are based on certain assumptions that the reserves and resources
can be economically exploited. Any statements that express or
involve discussions with respect to predictions, expectations,
beliefs, plans, projections, objectives, assumptions or future
events or performance (often, but not always, using words or
phrases such as "seek", "anticipate", "plan", "continue",
"estimate", "expect, "may", "will", "project", "predict",
"potential", "targeting", "intend", "could", "might", "should",
"believe" and similar expressions) are not statements of historical
fact and may be "forward-looking statements". Forward-looking
statements involve known and unknown risks, ongoing uncertainties
and other factors that may cause actual results or events to differ
materially from those anticipated in such forward-looking
statements, including production, cashflow from operation and
capital investment estimates, performance of commodity hedges, the
results, schedules and costs of exploratory drilling activity,
uninsured risks, regulatory and fiscal changes, availability of
materials and equipment, unanticipated environmental impacts on
operations, duration of the drilling program, availability of third
party service providers and defects in title.
Although the Company believes that the expectations reflected by
the forward-looking statements presented in this document are
reasonable, the Company's forward-looking statements have been
based on assumptions and factors concerning future events that may
prove to be inaccurate. Those assumptions and factors are based on
information currently available to the Company about itself and the
businesses in which it operates. Information used in developing
forward-looking statements has been acquired from various sources,
including third party consultants, suppliers and regulators, among
others. Because actual results or outcomes could differ materially
from those expressed in any forward-looking statements, investors
should not place undue reliance on any such forward-looking
statements. By their nature, forward-looking statements involve
numerous assumptions, inherent risks and uncertainties, both
general and specific, which contribute to the possibility that the
predicted outcomes will not occur. Some of these risks,
uncertainties and other factors are similar to those faced by other
oil and gas companies and some are unique to the Company.
No assurance can be given that these expectations will prove to
be correct and such forward-looking statements should not be unduly
relied upon. The Company does not intend, and does not assume any
obligation, to update these forward-looking statements, except as
required by applicable laws. These forward-looking statements
involve risks and uncertainties relating to, among other things,
changes in macro-economic conditions and their impact on
operations, changes in oil prices, reservoir and production
facility performance, hedging counterparty contractual performance,
results of exploration and development activities, cost overruns,
uninsured risks, regulatory and fiscal changes, defects in title,
claims and legal proceedings, availability of materials and
equipment, availability of skilled personnel, timeliness of
government or other regulatory approvals, actual performance of
facilities, joint venture partner underperformance, availability of
financing on reasonable terms, availability of third party service
providers, equipment and processes relative to specifications and
expectations and unanticipated environmental, health and safety
impacts on operations. Actual results may differ materially from
those expressed or implied by such forward-looking statements.
SOURCE Africa Oil Corp.