Calgary-based Canadian Overseas Petroleum (COP) splashes out $85mn to acquire block off West AfricaCalgary-based Canadian Overseas Petroleum (COP) splashes out $85mn to acquire block off West Africa
The junior independent has hatched the cash-and-shares deal with Liberia’s Peppercoast Petroleum in a move which will also see it shell out a $15mn loan to the vendor.
In return, COP is getting its hands on Block LB-13 off the country’s coast, an asset spread over approximately 2400 sq km. The Canadian will also acquire 2023 square kilometres of 3D seismic.
The deal will see COP hand over between $45mn and $50mn in cash to Peppercoast, all Liberia-based employees of whom it will retain. If the cash element comes in at the lower end of the scale the buyer will give up around one quarter of its shareholding while the maximum cash spend will see it part with around 22 per cent of shares.
COP said it is also giving a secured $15mn loan to the vendor “in order for Peppercoast to satisfy an account payable to TGS-Nopec Geophysical”.
“The loan funds pay for the acquisition and processing of the 3D seismic survey...and should also satisfy Peppercoast’s work obligations under the PSC’s first phase.”
Contract
The production sharing contract on the block is eight years which began in May 2007.
The first phase lasted four years with each of the next two phases set to last two years.
One well is expected to be drilled in each of phases two and three with the first spud set for the first quarter next year.
COP chief executive Arthur Millholland wrote in today’s announcement: “The drilling targets we have identified on LB-13 are Cretaceous turbidite sand stratigraphic traps analogous to the Paleocene drilling targets we are pursuing in the UK Central North Sea.
“We have identified a number of drilling prospects on the Block each having strong seismic AVO anomalies and other direct hydrocarbon indicators which possibly suggest the presence of hydrocarbons.”
