Sirius Petroleum is ready to develop its Ororo field, in Nigeria, the company said in its final results for 2017, published on May 15. The company said the joint operating agreement (JOA) on Ororo would allow it be transformed from an investing company into an operating company.
“The end of 2017 marked a milestone for the company including the financial resources to commence the development phase of the Ororo field, the company's first offshore marginal field oil and gas asset and as a consequence, since the 2017 year end, the Group has undergone both a financial and operational transformation,” said Sirius’ CEO, Bobo Kuti.
Sirius has raised cash, issuing shares worth US$9.5 million and entering a convertible loan deal, worth US$12 million, at a rate of LIBOR plus 6.5%. This financing, plus commitments from its partners, have allowed it to make progress on the Ororo-2 well. Sirius issued a statement at the beginning of May saying it expected to spud the well in the “near term”. The first well is expected to flow at 2,700 bpd and should take 45 days to drill.
In the last quarter of 2017, Sirius began holding talks with Reyl & Co. on a US$100 million facility, backed by a prepayment deal the company reached with BP, in July. Under this agreement, BP provides a prepayment of up to US$10 million per cargo.
Assuming the Reyl facility is completed, Sirius said it would carry out a “multi-well campaign” to develop the Ororo field fully, with the drilling of up to four more wells and the installation of production and pipeline facilities. The field is in Oil Mining Licence (OML) 95, in shallow waters offshore Ondo State. Owena Oil & Gas, Ondo State’s energy arm, has a 45% stake in Ororo.
Ororo was discovered by Chevron in 1986 but was not developed and was designated as a marginal field. If the field is not developed, the licence is due to expire in May 2019.
“Through an innovative combination of equity, debt, prepayment and vendor financing agreements the company has positioned itself not only for first production and cashflow from the upcoming Ororo-2 test, but potentially for full field development via a further four wells and permanent processing and export infrastructure,” said Cantor Fitzgerald, Sirius’ nominated adviser (Nomad).