16 Nov 2016
Sirius Petroleum (AIM: SRSP), the investing company focused on oil and gas exploration and development opportunities in Nigeria, is pleased to announce that it has entered into a key vendor financed offshore drilling contract (“Vendor Finance Contract”) with COSL Drilling Pan-Pacific Limited (“COSL”), for the provision of a high specification jack-up rig that will be utilised by the Company to drill a multi well campaign as part of its shallow offshore development strategy in Nigeria, commencing in the first half of 2017. This Vendor Finance Contract establishes the cornerstone and thereby major element of the operational financing for the Ororo project.
Under the terms of the Vendor Finance Contract, COSL will extend delayed invoice and payment terms to Sirius which will have the effect, dependent on successful drilling, of deferring a significant portion of the cost of the rig until after the Company commences the production of hydrocarbons, but is otherwise on normal industry terms. The contract envisages a drilling programme on the Ororo Field and could be expanded to include other potential offshore assets.
COSL Drilling Pan-Pacific is the international Branch of COSL China, one of the leading Global Oilfield service companies and a majority owned subsidiary of the Chinese state-owned China National Offshore Oil Corporation (CNOOC). COSL is a global provider of drilling equipment and services to the upstream oil and gas industry, providing drilling rigs, seismic vessels and services, well service and marine and transport vessels.
The Company intends to announce further details regarding the final elements of the financing and operational service agreements, including the Joint Operating Agreement (“JOA”), to support its proposed drilling programme for Ororo.
Independent petroleum consultants, Rockflow Resources (“Rockflow”), recently produced a Competent Persons Report on the Ororo field attributing 2C contingent resources, net to Sirius, of 11.5mmboe. Rockflow calculated a NPV10 valuation of over $49m, net to Sirius, at a flat, real Brent price of $50/bbl and flat, real gas price of $3.50/mcf. The announcement of the COSL Vendor Finance Contract brings the Company an important step closer to first hydrocarbons and the unlocking of this valuable resource.
“We are delighted to have secured this highly competitive, vendor financed rig contract with COSL, one of the world’s leading oilfield service companies. This innovative financing solution affirms our belief in the quality of the Ororo field and our confidence in achieving first hydrocarbons in H1 2017. We look forward to working with COSL and our other project partners to commence the development of our interests in Nigeria.”
“We are excited to work in collaboration with Sirius Petroleum to enable the Company to reach first oil. It is important for oil service providers and operators to pool their resources and strengths making operations more efficient and cost effective thereby creating value for both parties.”