Canadian Overseas Petroleum Limited

Portfolio of Projects

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Portfolio of Projects

In October 2014, COPL formed a joint venture company with Shoreline Energy International Limited called Shoreline CanOverseas Petroleum Development Corporation Limited (“ShoreCan”). Both partners hold a 50 percent interest in the jointly controlled company, which is focused on acquiring upstream oil and gas exploration, development and producing assets in Africa. ShoreCan is a special purpose vehicle registered in Bermuda. The following country and project overviews fall under the realm of ShoreCan’s dealings.

The Company’s strategy is to grow a mid-sized international oil and gas business offshore Africa by farming into and/or acquiring interests in exploration and/or undeveloped assets as well as in producing assets using the expertise and experience of its senior management team.

The Company’s short-term activities are:

  • working to progress the financing and the planning of drill locations of the first well on OPL 226 in Nigeria;
  • working with the Mozambique government to negotiate the terms of the PSC governing the PT5-B block; and
  • working to successfully conclude a variety of new opportunities available in Africa.

Nigeria

On September 14, 2016, COPL announced that ShoreCan had completed the acquisition of 80% of the share capital of Essar Exploration and Production Limited (Nigeria) (“Essar Nigeria”).

Essar Nigeria’s sole asset is a 100% interest and operatorship of an oil prospecting license, located about 50 kilometres offshore in the central area of the Niger Delta (“OPL 226”). As a party to a PSC for OPL 226, Essar Nigeria is required to seek Nigerian Government ministerial consent for the transaction. Application has been made to the appropriate government bodies and the process is in the final stage of being granted ministerial consent for the Essar acquisition.

On October 2, 2018, the Nigerian National Petroleum Corporation (‘NNPC’) granted a conditional approval of a twenty-four month extension for the Phase-1 exploration period until October 1, 2020, subject to certain conditions and a performance bond.

OPL 226 has an area of 1530 km2 and is situated in water depths ranging from 40 to 80 meters. It offers oil appraisal and development opportunities having near term oil production potential and significant exploration upside. Historically, four of the five wells with oil and gas shows were drilled in 1972 and 1973, however, the most recent fifth well (Noa-1) was an oil discovery drilled in 2001. ShoreCan, has completed additional seismic processing of the most recent 568 km2 3D seismic survey acquired by Essar Nigeria in 2012. The advanced seismic processing techniques, applied to this data set by ShoreCan, were successfully completed to differentiate oil-bearing sands from gas-bearing or water-bearing sands. ShoreCan plans to drill exploitation wells adjacent to the Noa-1 discovery well.

In July 2018, ShoreCan received and agreed to a project financing and offtake agreement term sheet (the “Term Sheet”), providing for a minimum $30 million to a maximum of $50 million Senior Secured Facility (the “Facility”), for investment by ShoreCan into Essar Nigeria from the Mauritius Commercial Bank Limited and Trafigura PTE Ltd. (“Trafigura”). The Facility would provide funding for all production related expenditures following the drilling and testing of the initial production well to be drilled by Essar Nigeria on OPL 226. Drawing on the Facility is contingent on among other things:

  • An additional $20 million to $33 million of funding from ShoreCan;
  • $100 million funding from an offshore oil services group (“Service Provider”) to deliver the project;
  • A minimum of 6,000 bbl/d production rate averaged over 20 days; and
  • The execution of a formal definitive binding agreement between the parties.

Other material terms of the proposed Facility include the following: two-year term to maturity and a grant to the lenders of $3 million worth of warrants to purchase COPL common shares with a term of two years with an exercise price equal to the market price of the COPL common shares on the date of closing of the Facility.

The project as planned involves the drilling and completion of a horizontal oil production well offsetting the 2001 Noa-1 oil discovery well and the drilling and completion of two (2) to three (3) additional high angle oil production wells in the adjacent Noa East fault block from a common wellhead platform, and placing these wells on production in an approved early production scheme. Essar Nigeria has prepared a work program for this initial campaign on OPL 226 in the form of a field development plan for submission to the Concessionaire, NNPC.

Nigeria Map


Mozambique

In Mozambique, the Company is part of a consortium that has entered into final discussions regarding the awarding of a prospective onshore license (PT5-B) under the 5th licensing round. COPL’s interest in Mozambique will be dependent on successful negotiation of a new Production Sharing Contract (PSC).

The consortium has been invited to negotiate with the Government of Mozambique the terms of the PSC governing the block. These will include the acquisition of 1600 line km of 2D seismic. According to the Company’s Mozambican partner, the Instituto Nacional de Petroléo (INP) is currently finalizing the Exploration Production Concession Contract (EPCC) discussions with successful bidders as part of the Fifth Licensing Round in 2014.

On October 8, 2018, the INP announced that it had signed agreements with ExonMobil and Rosneft for offshore blocks in the Rovuma Basin. INP signed an agreement with ENI (Ente Nazionale Idrocarburi) and Sasol for an offshore block in the Northern Zambezi Basin on October 18, 2018. The Company expects to enter into discussions with INP regarding onshore Block PT5-B before year end. The ExxonMobil EPCC agreed version will serve as basis for future negotiations with all companies.

* This section contains forward-looking information.

Mozambique - Sept 21, 2018

 

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