Saturday, May 13, 2006

JDA Promises Announcement On Block 1 Discovery When Second Well Results Are In

In an article in Nigeria's Guardian, the leading daily newspaper, JDA spokesman Sam Dimka says the Joint Development Authority will make an announcement on any discovery in the Chevron-ExxonMobil Block 1 of the Nigeria-Sao Tome and Principe Joint Development Zone as soon as results from a second well are complete.

Update: Mark St. Amour has written concernign his confusion over this story. He points out that the May 10 article from the Guardian syas nothing about a "second" well, and it in fact mentions "the first exploratory well."

Mark is certainly justified in his confusion, although I'm curious why he was never confused about dozens of other Dimka comments that failed to come true. He did say that he would contact the JDA tomorrow for the latest on this issue.

In any case, as I wrote back to Mark, Dimka is well aware that the first well was capped long ago, as Chevron announced, and therefore must be referring to the second well on May 10. I regret not pointing out the inconsistency earlier, and thank Mark for his correction.

The JDA, in another development, said it is awaiting the analysis of the result of the first exploratory well on block 1 in the JDZ.

"After that we will announce whether there was a discovery or not," said a spokesman for the authority, Mr. Sim Dimka.

The first well started just after Christmas and was completed in mid-February, while results were known around mid-March. If the same timetable prevails, the results from the second well ought to be known before the end of May. It is unclear whether Chevrion will share them with the JDA, however, in a highly specific format that reveals any straddle into Block 2, and many doubts remain on that issue.
Here is the entire Guardian article in which the Dimka promise appears. Investors should be aware that much of what Dimnka says often proves to have no foundation in fact, and in fact never happens:

Joint Development Zone nets N20b revenue

By Sulaimon Salau, with agency report

OPERATIONS from the Nigeria, Sao-Tome and Principe Joint Development Zone (JDZ) have yielded more monetary results, as a ransom of $145,649,647 (N20.4 billion) was received as payment for signature bonus on block two, three and four of the JDZ.

According to a statement issued by the Joint Development Authority, (JDA), which is mandated to develop and manage the affairs of the zone, "the amount was received from the contract parties on behalf of the state parties" on the zone.

Revenue from the resources, which is situated in the common maritime boundary of the two countries, according to the treaty, is shared in ratio 60:40 in favour of Nigeria.

The three blocks were in March signed in Abuja following a clarification of some contradictory issues on the project.

Operators of block two, three and four are, ERHC Energy Incorporation, Addax Petroleum Development Company and Sinopec International Petroleum Exploration and Production Corporation in Nigeria.

The JDA, in another development, said it is awaiting the analysis of the result of the first exploratory well on block 1 in the JDZ.

"After that we will announce whether there was a discovery or not," said a spokesman for the authority, Mr. Sim Dimka.

Chevron Corporation, operator of block 1, announced last month that the exploratory well was completed in March, noting that the Oboh-1 well is located in 1,720 meters of water.

Other operators in block 1 are Esso Exploration and Production Nigeria-Sao-Tome Limited, a unit of ExxonMobil and Dangote Energy Equity Resources.

Chevron has 51 per cent in the block, while Esso Exploration and Dangote Energy have 40 per cent and nine per cent respectively.

Besides, block two, three and four of the JDZ were among the five blocks offered by the JDA in the 2004 bid round, including blocks five and six.

The JDZ lies approximately 200 kilometres offshore Nigeria, and covers an area of 34,540 square kilometres in the rich Gulf of Guinea. It was established in 2001 following ratification of a formal bilateral treaty between Nigeria and Sao-Tome and Principe.

Here is the story on the completion of the first well that ran on April 4 in the Daily Independent. It cites a March 15 completion date:

Tuesday 4th, April 2006 HOME | Previous Page

Chevron Completes First Exploration Well In JDZ

Chevron Nigeria Limited has completed an exploration well in the Joint Development Zone (JDZ) jointly owned by Nigeria and Sao Tome and Principe.

The oil bloc is reputed to hold about one billion barrels of oil and gas reserves.

A Chevron official said the company had started evaluating the results of the drilling completed last March 15.

Geological studies of the prospectivity of the bloc suggest it could hold even more oil and gas resources than the Akpo field in Nigerian waters to the north, thought to have recoverable hydrocarbon reserves of more than a billion barrels.

Chevron, which acquired rights to explore the bloc in October 2004, began drilling Obo-1, the location of the well, last January.

The company has a 51 per cent stake as operator of the acreage, which also has ExxonMobil with 40 per cent equity holding, while the rest is owned by Dangote Energy Equity Resources, a jointly owned Nigerian-British company.

The Chevron official, who saw the results of the Obo-1 well said: “It is an encouraging result. Everyone is pleased.”

He disclosed that Chevron and one of co-American partner, ExxonMobil, would meet today to plan their next moves, stressing that Chevron is yet to decide when it would drill more wells to determine its exact proven recovery reserve size.

He attributed the high cost of drilling operations in the field to the acute shortage of oilrigs off West Africa since it was discovered, saying this has made it extremely expensive to drill further short notice.

The partner companies, he said, would not be able to confirm the full extent of the discovery until they had drilled more wells, explaining that it took the drilling of four development wells to ascertain the full extent of the Akpo field.

Another source hinted that the consortium was still examining the data from the field and was unlikely to agree on how to release the result before the end of April.

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