Canadian Overseas Petroleum Limited (LON:COPL CVE:XOP) is awaiting an upcoming appraisal of an oil discovery, the Noa prospect, at its OPL 226 project area, located 50 kilometres offshore Nigeria in the central part of the Niger Delta.
While the project has been taking longer than originally anticipated, mainly due to a lack of adequate financing, chief executive Arthur Millholland has said the company’s “preparedness, enthusiasm and persistence have not diminished one little bit."
An independent report, in March 2016, estimated that Noa had 237.1mln barrels of recoverable, contingent oil resources.
With oil prices currently floating around a 3-year high, the lure of the huge resources could draw in investors and partner companies that could kick the project into high gear.
If the appraisal well is successful it could potentially be brought online as part of an early production scheme, along with three further wells that would precede a full development of the field.
The project is controlled by Essar Exploration and Production Limited (Nigeria), a company in which ShoreCan, a joint venture between COPL and Shoreline Energy International Limited, holds an 80% stake.
The ShoreCan venture, officially known as Shoreline Canadian Overseas Petroleum Limited, was established by the two companies as part of a strategy to generate stable cash flow from secure offshore and onshore assets in the sub-Saharan Africa region, well known for its natural resource opportunities.
Shoreline Energy is a Lagos-based energy and infrastructure company and is one of Nigeria’s largest conglomerates with a portfolio comprising 16 operating companies and over 3,000 employees, covering sectors from energy and infrastructure to telecoms and investments.
Given the participation of a Nigerian company in the project, Millholland says the project continues to enjoy considerable domestic support.
With Nigeria occasionally proving to be a difficult jurisdiction for oil explorers, having indigenous expertise will likely prove advantageous for COPL.
Promising award in Mozambique
In December 2017, the group expanded its reach in Africa after ShoreCan, as part of a bidding consortium, was awarded the Block PT5-B asset by the government of Mozambique.
ShoreCan holds a 57% interest in the consortium, alongside Bluegreen Holdings Ltd with a 23% holding, Mozambique-based investment firm Indico Dourado with 10%, and the Mozambique state-owned Empresa Nacional de Hidrocarbonetos, also with 10%
The asset spans some 4,356 square kilometres of the country’s coastal plain and surrounds the margins of the Pande Gas field, part of the Pande-Temane gas field which contains 2.6 trillion cubic feet of gas.
The company said it believes the block offers potential for additional gas and light oil resources based on historic 2D seismic data and its proximity to Pande-Temane.
Following the award, the company along with its consortium partners was invited to negotiate the terms of a production sharing contract during the first quarter of 2018.
In a similar fashion to Nigeria, Mozambique is sometimes a difficult operating environment.
However, much like its partnership with Shoreline in the Niger Delta, COPL has domestic input both from Shoreline’s sub-Saharan operating focus and its fellow Mozambique-based consortium members.
It is anticipated that ShoreCan will be asked to capture around 1,600 kilometres of new 2D seismic data from the project.
COPL’s market cap is £7.62mln at 0.45p.