James Bay Resources Limited now has its Joint Operating Agreement and Deed of Assignment with Bicta Energy, the Nigerian holder of Ogedeh marginal field, approved by the Nigerian authorities. The approval was given by the Minister of Petroleum a few weeks ago. The Canadian minnow had waited for about a year.
James Bay had planned to reenter Ogedeh-1 in late 2012, months after it submitted its documents with the Department Of Petroleum Resources, the Nigerian regulator. Ogedeh was discovered in the early 90’s by Chevron and auctioned by the Nigerian government in the 2003 marginal field auction. The company also proposes to drill a new well. Based on the results of th two, the asset would either be developed through a tie-back to either of the neighbouring fields, or developed on a stand-alone basis.
“The petrophysical data evaluation by James Bay confirmed four main hydrocarbon bearing intervals, consisting of both oil and gas with one bottom hole oil sample. James Bay has prepared reserve estimates and production forecasts which are based upon wire-line logs evaluation, well drilling reports and analogue experience from comparable data from nearby producing and development fields within 5 – 10 kms of the field”, James Bay said in 2012.
The terms of the agreement include the acquisition by JBR of a 47% direct interest in the property by paying a farm in fee of US$2,500,000 as follows:
•The sum of $100,000 in five months installments from the conclusion of the Company’s successful completion of its due diligence.
•The sum of $500,000 will be put into an escrow account to be disbursed as follows;
• $200,000 shall be released upon approval of the assignment of the Company’s participatory interest by the Federal Government Authorities and the issuance of all necessary documents including the Deed of Assignment.
• $300,000 will be released upon the arrival of the drill rig to re-enter and drill the farm-out area following approval by relevant Government Authorities.
- The sum of $1,000,000 shall be paid upon the completion of a final independent report of P1 reserves of 7 million proved recoverable barrels of oil, appraised in a manner satisfactory to the Company. Provided that failure to reach the above amount of proved recoverable barrels of oil, an alternative payment structure of $0.10 (equal to 10 cents) royalty per barrel shall be made on oil produced and sold over the term of the Award to an amount not exceeding $1,000,000.00.
- The final sum of $900,000 shall be paid upon the completion of 60 days commercial production. The Company will be entitled to a preferential cash flow of 80% of the available crude oil until all costs of the joint operation by the Company have been fully realized. The remaining 20% shall be shared between the parties in proportion to their participatory interest. James Bay shall be the operator of the Project for the life of the Project.
The Company will be entitled to a preferential cash flow of 80% of the available crude oil until all costs of the joint operation by the Company have been fully realized. The remaining 20% shall be shared between the parties in proportion to their participatory interest. James Bay shall be the operator of the Project for the life of the Project.
Please find the release by James Bay on this link:
Information from Africa Oil and Gas Report was used in this report.