REG - San Leon Energy PLC - Update on development of the Oza field, Nigeria

San Leon EnergyAnnouncement

24/03/2022 13:30

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RNS Number : 9401F  San Leon Energy PLC  24 March 2022

 

 

 

The information communicated within this announcement is deemed to constitute
inside information as stipulated under the Market Abuse (amendment) (EU Exit)
Regulations 2019/310. Upon the publication of this announcement, this inside
information is now considered to be in the public domain.

 

24 March 2022

San Leon Energy plc

("San Leon" or the "Company")

 

Update on development of the Oza field, Nigeria

 

San Leon, the independent oil and gas production, development and exploration
company focused on Nigeria, notes the announcement made today by Decklar
Resources Inc. ("Decklar") in Canada.  San Leon has a 11.5% shareholding in
Decklar Petroleum Limited ("DPL"), the local subsidiary of Decklar operating
in Nigeria, and has also made a US$5.5 million loan to DPL, via 10% per annum
unsecured subordinated loan notes.

 

Part of the text of Decklar's announcement is set out below:

 

·    "Decklar and its co-venturer Millenium Oil & Gas Company Limited
("Millenium") have signed a crude handling agreement with Umugini Pipeline
Infrastructure Limited ("UPIL") whereby oil produced at the Oza Oil Field will
be trucked to the UPIL crude handling facilities and further transferred to
the Shell Petroleum Development Company of Nigeria Limited ("SPDC") JV
Forcados Oil Export Terminal via the Umugini Pipeline.

·    A permit from the Nigerian government regulatory authorities to
transport the crude oil by truck is in the final stages of approval, and it is
anticipated that the first shipments of oil will be delivered to the UPIL
facilities in early April 2022.

·    As previously announced, due to unforeseen downtime, maintenance and
other issues with the Shell-operated Trans Niger Pipeline, Decklar has
suffered delays in establishing crude export activities and commercial
production from the Oza-1 well.

·    A second alternative delivery strategy incorporating barging oil from
the Oza field to an offshore floating storage facility is also being pursued
and would allow for higher shipping volumes once in place. Negotiations with
local firms are in advanced stages to secure exports through barging oil to an
offshore floating storage and offloading facility.

 

Calgary, Alberta -- Decklar Resources Inc. (TSX-V: DKL) (OTCQX: DLKRF) (FSE:
A1U1) (the "Company" or "Decklar") is pleased to announce the signing of a
Crude Handling Agreement ("CHA") between the Company's wholly-owned subsidiary
Decklar Petroleum Limited ("DPL"), its co-venturer Millenium and UPIL to
deliver oil produced at the Oza Oil Field to the UPIL crude handling
facilities for injection into the Umugini Pipeline for ultimate delivery to
the SPDC JV Forcados Oil Export Terminal for export and sale of Oza crude oil
production.

 

Oza Field Oil Export Operations - Trucking and Barging

 

Decklar has been pursuing logistics and export activities and made progress on
several options, including:

 

-     Completion and signing of the CHA between DPL, Millenium and UPIL to
deliver oil produced at the Oza Oil Field to the UPIL crude handling
facilities for injection into the Umugini Pipeline which will transport the
crude oil to the SPDC JV Forcados Oil Terminal for export and sale.

-     A permit from the Nigerian regulatory authority to transport the
crude oil by truck is in the final stages of approval. It is anticipated that
the first shipments of oil to the UPIL export facilities commence in early
April 2022.

-     The next phase, and the most likely mid- to long-term solution for
an alternate export option is barging oil directly from storage facilities at
the Oza Oil Field along the Imo River to a floating storage and offloading
("FSO") facility located offshore in shallow waters off the Bonny River.

-     Options and logistics to transport oil by barge from the Oza field
to an offshore floating storage facility are currently at advanced stages of
negotiations. Shipping and exporting the Oza crude oil using the barge  and
FSO system could enable higher crude oil volumes per shipment and greater
transportation and cost  efficiency.

 

In terms of operations, Decklar has successfully finalized the re-entry,
re-completion, and flow testing of the Oza-1 well, as detailed in the press
release dated November 5, 2021. Crude oil storage tanks on site now hold
approximately 20,000 barrels of oil, awaiting export and sale. Once Oza-1 is
brought onto commercial production, the Company expects a stabilized flow rate
of between 1,200 - 1,500 barrels of oil per day ("bopd").

 

Decklar and Millenium had initially planned to utilize the Shell-operated
Trans Niger Pipeline ("TNP") to the Bonny Export Terminal; however, the link
to the TNP between Isimiri, where Oza crude would enter the Shell operated
pipeline network, and the TNP tie-in at Owaza, has been down for maintenance
with an uncertain timeline to restart operations.

 

As previously announced, 2022 development plans for the Oza Field include:

-   Currently in advanced stages of finalizing arrangements with local
communities and contractors to begin construction of the access road and
associated infrastructure for a new oil well drilling pad;

-     Drilling the first new development well;

-     Re-entry, re-completion, and flow testing of the other two existing
wells (Oza-2 and Oza-4), including tie-in to existing production facilities;

-     Installation of a Central Production Facility and infrastructure
tie-ins for new well locations to replace the current Early Production
Facility;

-     Completion of an inter-field evacuation pipeline and all related
infrastructure; and

-     Drilling of up to two additional development wells.

 

Development plans for the Oza Field beyond 2022 include up to five additional
development wells."

 

Enquiries:

 

 San Leon Energy plc                                   +353 1291 6292
 Oisin Fanning, Chief Executive

 Julian Tedder, Chief Financial Officer
 Allenby Capital Limited                               +44 20 3328 5656

 (Nominated adviser and joint broker to the Company)
 Nick Naylor

 Alex Brearley

 Vivek Bhardwaj
 Panmure Gordon & Co                                   +44 20 7886 2500

 (Joint broker to the Company)
 Nick Lovering

 James Sinclair-Ford
 Tavistock                                             +44 20 7920 3150

 (Financial Public Relations)
 Nick Elwes

 Simon Hudson
 Plunkett Public Relations                             +353 1 230 3781
 Sharon Plunkett

 

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