Page 4 - AfrOil Week 29

AfrOil CommEntaRy AfrOil
Second acts in Nigeria
ADM has appointed a new CEO who knows his way around Nigeria
nigERia
WHat:
ADM has appointed the former CEO of EER, Osamede Okhomina
WHy:
The minnow is working hard to expand and to make a pro t in 2020
WHat nExt:
Okhomina’s previous stint with EER highlights the pitfalls of Nigerian operations
OSAMeDe Okhomina has been appointed CeO of ADM energy, with a plan to grow in Nigeria and West Africa. e executive was pre- viously the founding partner and CeO of energy equity Resources (eeR), a unit of which went into liquidation in February 2019.
Okhomina said he was joining ADM at “an exciting time in the company’s development. Our strategy will be to build on our existing asset base in Nigeria and target other attractive invest- ment opportunities in the oil and gas sector, primarily in West Africa, that we feel will bring signi cant value to ADM energy shareholders as we grow the company.” e well-connected Nigerian – the son of the former minister of housing, Ama Pepple – replaces Stefan Olivier as the CeO of the company.
ADM also appointed Sheikh Ahmed Bin Dal- mook Al Maktoum – a member of Dubai’s rul- ing family – as its president in June, following his acquisition of 30% of the company in April. Pre- viously, the company had been called MX Oil.
Okhomina, as ADM noted, has deep links to the Nigerian energy scene. He was part of the team involved in reaching a settlement between Royal Dutch Shell and the family of Ken Saro- Wiwa. At eeR, Okhomina was involved in developing the Aje eld, in OML 113, in which ADM is also a partner.
He acted as senior advisor to the Nigerian Communications Commission (NCC) and has worked on deals around Africa, including in Libya, Mauritania and equatorial Guinea.
ADM’s chairman, Richard Carter, noted Okhomina’s “wealth of experience in the oil and gas sector and comprehensive knowledge of operating in the region of our principle invest- ment, including high-level contacts with busi- ness and governments, will provide an invaluable contribution to ADM energy as we strengthen the board and progress our strategy to build a larger, balanced portfolio of investments”.
Progress
ADM appears to be on the right track. It cut its losses in 2018 from the previous year and aims to be pro table by 2020. Carter, setting out the company’s full-year results in June, said the com- pany was making plans for a “larger, balanced portfolio of investments ... ADM energy will target investment opportunities in undervalued production and near-production assets, primar- ilyinAfrica.”
e Aje eld is a small step in the right direc- tion. e eld was producing around 3,100 bar- rels per day (bpd) in April, of which ADM’s share was 155 bpd. e eld was discovered in 1997
and has multiple reservoirs, in the Turonian, Cenomanian and Albian age sandstones.
Production began in April 2016 from two Cenomanian wells, Aje-4 and -5. Oil is exported via a oating production, storage and o oading (FPSO) unit.
e OML 113 licence has been extended for 20 years, giving the partners some degree of sta- bility for future investments. Drilling is expected to take place this year on the Turonian and Cen- omanian reservoirs, with initial development work anticipated to take output to 8,000-12,000 bpd. It may subsequently expand to 20,000 bpd.
e partners are also planning a Turonian gas development. A plan for this was submitted to the government in 2017 and covers four or ve wells. e licence is close to Nigeria’s mar- itime border with Benin and not far from Lagos – expected to be a strong market for any gas produced. ADM is working on plans for project nancing, as it lacks the resources to fund work itself.
Furthermore, drilling in the nearby OPL 310 made the Ogo discovery in 2013, suggesting there may be further potential on OML 113.
ties
While eeR ended in failure – with the eeR unit being liquidated in 2018 and eeR Norway in April this year – the company did make some headway. Most notably, in 2016, it was appointed as an offtaker of crude by Nigerian National Petroleum Corp. (NNPC) for onward sale. is allowed it to apply to NNPC to li 950,000 bar- rels per month. It only managed to li one such cargo, though, given production problems in Nigeria at the time.
Okhomina clearly has ties to the Ogoni area and has previously discussed acquiring acreage in that region. In comments to AfrOil in 2010, when starting out on the eeR venture, he high- lighted Shell’s plans to withdraw and the oppor- tunities that would arise. More broadly, he talked about the possibility of restoring shut-in and mature elds – likely again to be an option for ADM.™
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Week 29 23•July•2019