Africa Oil secures regulatory approval for enlargement and offshore license extension in Nigeria

Canadian oil and gas company Africa Oil Corp. has received a set of clearances from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) – one for the amalgamation of its wholly owned subsidiary Africa Oil Papa Corp. and BTG Pactual Holding, and another for the extension of a petroleum mining license offshore Nigeria.

The deal, which was announced in June, encompasses the consolidation of 100% ownership of Prime Oil & Gas Coöperatief in Africa Oil in exchange for the issuance of common shares in the Canadian firm to BTG Pactual Oil & Gas.

Since the amalgamation does not entail a change of control in the beneficial ownership of Prime’s Nigerian subsidiaries, the regulator has allowed it to proceed as proposed, noting that ministerial consent is not required.

Dr. Roger Tucker, Africa Oil Chief Executive Officer (CEO), said: “We are grateful to NUPRC for its timely response to Prime’s application for regulatory clearance in respect of  the transaction. We shall move forward promptly to complete the Amalgamation, which we now expect to be achieved by the end of first quarter 2025.”

The completion of the amalgamation is subject to several customary closing conditions, including competition clearance from the Federal Competition & Consumer Protection Commission (FCCPC), approval from Nasdaq Stockholm, completion of the previously announced farm-down of Africa Oil’s Namibian interests that are held via Impact Oil & Gas Limited, and a reorganization of the holding structure of BTG Pactual Holding to implement the amalgamation.

The Canadian player was also granted an extension of petroleum mining lease 52 (PML 52), containing part of the Agbami field, described as one of Nigeria’s largest deepwater discoveries. The 20-year extension is set to become effective on November 24, 2024. The field situated approximately 113 kilometers off the coast of the central Niger Delta region is developed via sub-sea wells tied back to a floating production storage and offtake (FPSO) vessel – FPSO Agbami – through steel catenary risers.

“The renewal of PML 52 follows last year’s renewal of the licenses for Prime’s Akpo, Egina and Preowei fields. With respective 20-year renewals for each of these fields, our long-term production outlook from these high quality assets is secure. We thank NUPRC for its efficient processing of the application and issuing the renewal,” noted Africa Oil CEO.

PML 52 covers 62.46% of the producing Agbami field discovered by the Agbami-1 well in 1998. The largest interest in the PML 52 production sharing agreement of 60% is held by Famfa Oil, followed by Chevron’s 32% operating interest and Prime Oil & Gas Coöperatief’s 8%. Following the completion of the amalgamation transaction, the Canadian player’s 50% interest in Prime, and thus its stake in the PML, is set to increase to 100%.

The field started producing in June 2008, reaching peak gross field production of 250,000 barrels of oil per day (bopd) a year later. It contains oil described as light with a gravity of 45° to 47° API.

According to the Canadian player, 30 producers, five gas injectors, and ten water injectors had been drilled by December 31, 2023, when the field’s cumulative oil production breached 1,089 million barrels. Its average oil production rate in 2023 was around 98,000 bopd.