THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018). UPON THE PUBLICATION OF THIS ANNOUNCEMENT, THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.
30 March 2022
ADM Energy PLC
("ADM" or the "Company")
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC), a natural resources investing company, announces the result of a competent person's report on the Barracuda prospect in OML141, offshore Nigeria.
As announced on 28 April 2021, the Company acquired a 51 per cent. stake in K.O.N.H (UK) Limited ("KONH") and through that a controlling interest in a Risk Sharing Agreement ("RSA"), for which KONH holds a 70 per cent. interest. The Company, together with a consortium of parties with an interest in the RSA, intends to provide or procure funding for all capital expenditure ("Capex"), subject to the joint operators' approval to develop any discovered hydrocarbons, in return for 235 per cent. of approved Capex to be recovered plus a 15 per cent. net profit interest ("NPI"). The equity owners of OML 141 are Emerald Energy Resources Limited ("Emerald") (54 per cent.), Amni International Petroleum Development Company Limited (44 per cent.) and Supernova Energy B.V. (2 per cent.).
ADM commissioned Xodus Group Limited ("Xodus") to prepare a CPR on the Barracuda area and Xodus has calculated gross, unrisked Prospective Resources for the RSA using standard geological and engineering approaches applied to the data made available by ADME.
OML 141 lies predominately within the coastal swamp in the Niger Delta in Nigeria. The Barracuda area is located in the northwest of OML 141 in which four exploration wells have previously been drilled. Three wells were drilled in 1967 and the most recent exploration well, Barracuda-4 (BX-1), was drilled in 2007 by Emerald and CNOOC Ltd. This well provides the most relevant data for classifying the resources. Prior to the publication of this CPR by Xodus, the Barracuda RSA was the subject of a CPR undertaken by Ryder Scott in 2016. Xodus has reviewed the available relevant Barracuda data and has not identified convincing evidence as to the presence of light, producible hydrocarbons. There are, however, numerous indications as to the presence of heavy, residual hydrocarbons from past migration and both Ryder Scott (in 2007) and Xodus have concluded that the Barracuda resources should be classified as prospective.
The Company and Xodus identified four potential Agbada Sandstone reservoirs: C, D1A and D1B plus a 'Deep Prospect'. STOIIPs for these reservoirs were calculated probabilistically. The prospective resource has been assessed separately for each individual reservoir unit and collectively for the combined reservoirs. This approach aligns with that of previous evaluations. In all cases, Xodus used a slab model (a range of constant thicknesses over the fixed areas of reservoir extent).
The estimate of STOIIP pertaining to the combined reservoirs, C3, D1A, D1B and 'Deep Prospect' is shown below:
Source: Xodus Group Limited
Xodus based its estimates of reservoir and production parameters on data provided by ADME supplemented with data from nearby analogue fields. Xodus used the same drilling and development schedule as described in the economic model provided by ADME to calculate prospective resource ranges. These represent resources for a first phase development plan which ADME designed to exploit any future discovery in the D1A/B reservoirs. Discovery of larger volumes would require additional phases of development to recover the hydrocarbons.
The economic model supplied by ADME has been reviewed against the RSA scope and provisions to confirm that the economic model represents the RSA accurately. Xodus has used this model with its independent production profiles, and CAPEX and OPEX adjustments to assess the economics of the RSA. For the 2U (P50) case the NPV10 is +$99mm with an IRR of 45% and therefore the prospect is considered to be robust for development, assuming at least 70mmbbl STOIIP is discovered.
PROSPECTIVE RESOURCES (RISKED)
Barracuda RSA OML 141
Emerald Energy Resources Limited
Source: Xodus Group Limited
Osamede Okhomina, CEO of ADM Energy, said: "Following the rigorous independent analysis from Xodus, the results of the CPR covering the Barracuda prospect in OML141 show that the prospect is considered prospective and robust for development, with a 2U (P50) case, the NPV10 is +$99mm with an IRR of 45%.
"The report provides a solid foundation to continue to the next stage of technical review which will include further subsurface analysis. We will also look to procure more analogue data from neighbouring fields to better understand the trap mechanisms. This additional work will be required to further appraise the asset and will bring us closer to making an investment decision."
ADM Energy plc
+44 20 7459 4718
Osamede Okhomina, CEO
Cairn Financial Advisers LLP
+44 20 7213 0880
Jo Turner, James Caithie
+44 20 3764 2341
Claire Louise Noyce
ODDO BHF Corporates & Markets AG
+49 69 920540
Michael B. Thiriot
+44 20 7618 9100
Harry Chathli, Alexis Gore, Tan Siddique
About ADM Energy PLC
ADM Energy PLC (AIM: ADME; BER and FSE: P4JC) is a natural resources investing company with an existing asset base in Nigeria. ADM Energy holds a 9.2% profit interest in the oil producing Aje Field, part of OML 113, which covers an area of 835km² offshore Nigeria. Aje has multiple oil, gas, and gas condensate reservoirs in the Turonian, Cenomanian and Albian sandstones with five wells drilled to date.
ADM Energy is seeking to build on its existing asset base in Nigeria and target other investment opportunities across the West African region in the oil and gas sector with attractive risk reward profiles such as proven nature of reserves, level of historic investment, established infrastructure and route to early cash flow.
Forward Looking Statements
Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates, and projections about its industry; its beliefs; and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and other factors, some of which are beyond the Company's control, are difficult to predict, and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions shareholders and prospective shareholder holders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances, or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.
Xodus is an independent, international energy consultancy. Established in 2005, the company has over 400 subsurface and surface focused personnel spread across the globe. The wells and subsurface division specialise in petroleum reservoir engineering, geology and geophysics and petroleum economics. All of these services are supplied under an accredited ISO9001 quality assurance system.
As a global energy consultancy, Xodus unites unique and diverse people to share knowledge, innovate and inspire change within the energy industry. We provide support across the energy spectrum, from advisory services to supply chain advice. Including all of the engineering and environmental expertise needed in between. Our people strive to ensure global energy supply as we all work together to realise a net zero world.
In compiling the CPR, Xodus used the definitions and guidelines set out in the 2018 update of the Petroleum Resources Management System ("PRMS") prepared by the Oil and Gas Reserves Committee of the Society of Petroleum Engineers ("SPE") and reviewed and jointly sponsored by the World Petroleum Council ("WPC"), the American Association of Petroleum Geologists ("AAPG") and the Society of Petroleum Evaluation Engineers ("SPEE").
CPR and Competent Person's Review
This announcement has been reviewed by Wim Burgers, technical consultant for the Company, a qualified production geologist with more than 40 years' experience in the oil and gas industry, who has also reviewed the CPR report to which it relates.
This announcement has also been reviewed by Jonathan Fuller, a qualified petroleum engineer and employee of Xodus, the Competent Person for the purposes of the CPR.
The information above has been extracted from the CPR and shareholders are advised to read the CPR in full. A copy of the CPR will shortly be available on the Company's website, www.admenergyplc.com.
1U, 2U and 3U
1U, 2U and 3U represent low, best and high case estimates of Prospective Resources respectively as defined in PRMS.
P10, P50, P90
The probability, being a 10 per cent., 50 per cent. or 90 per cent. chance, that the actual volume will be greater than or equal to that stated.
barrels of oil per day
Exploration or geological chance of success. The probability, typically expressed as a percentage that a given outcome will occur.
100% of the resources attributable to the licence.
Prospective Resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective Resources have both an associated chance of discovery and a chance of development. Prospective Resources are further subdivided in accordance with the level of certainty associated with recoverable estimates assuming their discovery and development and may be sub-classified based on project maturity.
Those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions on production, approved for development or justified for development. Reserves are also classified according to the associated risks and probabilities (1P, 2P and 3P).
With the application of a geologic risk assessment
Stock tank oil initially in place
Without the application of a geologic risk assessment