Independent Africa-focused oil firm SacOil has agreed revised terms with its partner Transnational Corporation of Nigeria for its entry into license OPL 281.

SacOil, which is headquartered in South Africa, said that it and technical partner Energy Equity Resources had been given a reduction in farm-in fees from $32.5 million to $24.5 million. Transcorp will remain the operator of OPL 281 and will pay 60 percent of the Capex costs to first production, as opposed to SacOil and EER carrying 100 percent of the Capex costs as previously agreed.

Sacoil said that Transcorp will also post the performance bond connected to the license to the Nigerian government.

Initiated by Transcorp, the revised terms followed as a result of a change of control in Transcorp. Pursuant to the change, Transcorp's aim is to take full responsibility for the operation of the concession and to become a leading Nigerian indigenous oil & gas upstream company with production.

Following this revision, EER's 50-percent portion of the fees is carried by SacOil as an interest bearing loan to EER that is repaid from EER's entitlement to production in OPL 281. SacOil paid $12.5 million towards the Signature Bonus on Feb. 28 2011 and the outstanding $12 million becomes due once the remaining conditions precedent to the farm-in agreement have been met. These include perfection of title and all the necessary Nigerian government and Nigerian National Petroleum Company consents in relation to the license.

According to the partners, a work program budget of $15 million is estimated for phase one of the exploration of OPL 281 and involves the reprocessing of the existing 3D seismic data and the drilling of at least one well. A Competent Person's Report issued by reserves auditing firm, AGR-TRACS International, has attributed a gross un-risked contingent resource of approximately 100 million barrels of oil equivalent, with additional potential in two further prospects and deeper zones.

"We are pleased with the revised terms as we will no longer be required to provide Transcorp with a carry on CAPEX costs from the point of entry to first oil," said SacOil Chief Executive Officer.

"All costs are now carried proportionately to the equity owned by Transcorp, EER and SacOil. SacOil and EER will be actively involved in the operations through the Operations and Management Committees."

Tags: SacOil