CALGARY, Alberta -- Addax Petroleum Corp. has agreed to acquire Esso Exploration and Production Nigeria- São Tomé (One) Ltd.'s 40% interest in block 1 of the Joint Development Zone (JDZ) that lies in the deepwater between Nigeria and São Tomé and Príncipe. This area of the Gulf of Guinea is one of the most prolific petroleum regions in the world, Addax says.
"This acquisition will expand and consolidate our leading position in this world class exploration region," says Jean Claude Gandur, Addax Petroleum president and CEO. "The addition of block 1 to our existing interests in JDZ blocks 2, 3, and 4 is consistent with our strategy that a focused, JDZ-wide exploration campaign will demonstrate the full potential of the region and bring about its earliest development. In that respect, block 1 is particularly important as it already contains a well, which encountered hydrocarbons and has several further prospects. I believe this acquisition to be an important building block in our broader deepwater Gulf of Guinea portfolio that will deliver value to our shareholders and stakeholders."
Addax Petroleum and Esso Exploration and Production Nigeria-Sao Tome (One) Ltd. have entered into a sale and purchase agreement whereby Addax Petroleum has agreed to acquire Esso's 40% interest in block 1 and, as consideration, to pay $77.6 million and 2% of Addax Petroleum's share of profit oil produced from the block. Completion of the sale and purchase agreement is subject to the approval of the Joint Development Authority of the JDZ.
Block 1 lies 300 km (186 mi) offshore Nigeria in water depths ranging from 1,600 to 1,900 m (5,249-6,234 ft), directly west of JDZ block 2 and directly north of JDZ blocks 3 and 4. Block 1 contains well Obo-1, the only well drilled to date in the JDZ. Obo-1 is significant because it encountered hydrocarbons when drilled in 2006. There are no further exploration commitments on block 1 during the current exploration period. Chevron operates block 1 with 45.9% interest.
The Aban Abraham deepwater drillship will drill up to ten exploration and appraisal wells, beginning in 4Q 2008, in the JDZ and at OPL291, Addax Petroleum's other deepwater Gulf of Guinea license area.