Page 21 - AfrOil Week 46

AfrOil NEWS IN BRIEF AfrOil

The agreement provides for the full and final set- threshold gas sales are achieved from the Log-
tlement of all disputes and claims of both parties baba field, then monthly payments will increase
in connection with a participating interest in to $150,000. The monthly payments cease once
OPL 281 previously assigned to Efora in Octo- the Settlement Amount has been satisfied, and
ber 2006. the Company will pay interest of 5% on any bal-
The resolution of the dispute is significant, ance outstanding after two years. The Company
given that it is one of the legacy issues which the and GDC have provided a charge, with cus-
core investor that took over Transcorp in 2011 tomary terms, over the Alternative Assets, and
inherited, and has been taking steps to resolve. CHL will be entitled to receive varying portions
Under the terms of the announced settle- of the proceeds of any future realisation of such
ment, both parties agreed to forgo their respec- assets while the Settlement Amount is outstand-
tive claims against each other and discontinue ing and these amounts will reduce the balance
pending lawsuits and arbitration in relation to outstanding.
their claims. In addition, Transcorp will pay a La-108: Well La-108, drilled in 2017, reached
total sum of $5.5mn over a period of 13 months a depth of 2,865 metres measured depth follow-
to Efora. ing two sidetracks. The well encountered gas in
Commenting on the development, President six sands within the Upper Logbaba and three
and CEO of Transcorp Owen Omogiafo stated: sands in the Lower Logbaba formation. How-
“I am glad that the mutual understanding that ever, during the initial perforating of the Lower
resulted in our partnership at inception has Logbaba sands, a spent perforating gun and
brought about this win-win resolution with great some wire were stuck in the well. The perforating
potential for future co-operation. We see this as gun and most of the wire were retrieved in 2019
a significant development that will pave way for but unfortunately a new fish was left in the well.
our planned development and optimisation of The workover rig (a snubbing unit) plus crew
the Oil and Gas asset without legal constraints. returned with a heavier workstring in March of
OPL 281 remains a prolific asset that will con- January 2019 the Company had ceased making this year, only to be interrupted by COVID-19
tribute substantially to the performance of the payments under the CHL Royalty Agreement. restrictions.
company upon completion of its development.” CHL commenced legal proceedings against both The crew returned in mid-September and
On his part, Efora’s CEO Damain Matroos VOG and GDC concerning the payments that recommissioned the rig. Fishing operations
said: “I am very happy to have brought this mat- CHL claimed it was entitled to under the CHL commenced in early October and the fish was
ter to a close during these challenging economic Royalty Agreement. recovered, the well was cleaned out, and six
times, and this removes one more legacy issue The Company is pleased to announce that the sets of perforations were shot across a total esti-
for the Group. The conclusion of this matter and parties have agreed not only to a full and final mated gross pay interval of 86 metres. The well
the receipt of these funds would also allow the settlement of all claims, but also the termination was opened up on November 11, 2020, to a flare
Group to allocate more time and resources to of the CHL Royalty Agreement. The material and achieved a flowrate of just under 20 mcf
invest in new initiatives to generate value for our terms of the Settlement Agreement are set out (566,400 cubic metres) per day with a FWHP
shareholders.” below. of 3,580 psig on a 32/64” choke. The theoretical
One of the underlining strengths of the The Settlement Amount agreed takes into AOF (Absolute Open Flow) potential of La-108
Transcorp Group is the quality of its assets, and consideration the past unpaid royalties up to the is estimated to be 50 mcf (1.416mn cubic metres)
the OPL 281 oil block is a significant part of its date of the agreement, disclosed in the Interim per day, though this is to be confirmed following
portfolio. It recently added to its energy asset Financial Statements as at June 30, 2020, as a analysis of all the test data. In addition, four more
mix a 1,000-MW power generation plant (Afam contingent liability of $4.9mn and management’s Upper Logbaba sands in La-108 remain availa-
Power), making it the leading power producer forecast of the present value of the estimated cash ble for perforation in the future, as required by
in Nigeria with a combined installed capacity of flows due under the CHL Royalty Agreement. production.
1,936 MW across its power plants. In addition, the Company considered the future This operation has been conducted with no
Transcorp, November 13 2020 cost of this litigation including damages, the major Lost Time Incidents to report to date,
huge drain on management resources and the bearing in mind that we were somewhat blind
Victoria Oil and Gas settles distraction from focusing on value enhancing to what lay below the fish and how and where
we would encounter what is an over-pressured
activities.
litigation with CHL and over many years unless it is satisfied earlier by vital resource to Cameroon, we have a dispensa-
The Settlement Amount will be paid monthly reservoir. Whilst we loathe the flaring of gas, a
issues La-108 update other means, including the realisation of cash tion to do this for a relatively short time to estab-
from certain trade receivables, which have been lish the nature of produced fluids, productivity,
Settlement of litigation: The Company is pleased fully provided in the Company’s accounts, active contaminants and so on, before we hook the
to announce that its wholly owned subsidiary and planned claims (insurance and legal) and well up to the permanent facility. Furthermore,
Gaz du Cameroun (GDC), a BVI company, and the sale of one of the Group’s non-core assets. we are conscious that we are on the outskirts of
VOG have entered into a confidential Settlement The Company can pay down the Settlement a major city, and we have attempted to keep out
Agreement with CHL, terminating the litigation Amount earlier without a redemption penalty. operational footprint as low as possible during
with Cameroon Holdings Ltd (CHL) and termi- The monthly payment commences at $90,000 this operation, working with local communities,
nating the CHL Royalty Agreement. from December 31, 2020, for four months, rising authorities and businesses prior to the opening
As previously disclosed in the Annual Report to $100,000 thereafter. In the event that gas sales of the well and at every step.
and Accounts to December 31, 2019, since commence from La-108 and certain prescribed Victoria Oil and Gas, November 12 2020

Week 46 18•November•2020 www. NEWSBASE .com P21