ADM Energy Completes Barracuda Field Transaction
ADM Energy has announce it has completed its acquisition of a controlling interest in a Risk Sharing Agreement for the development of the large-scale Barracuda Field in OML 141, an existing discovery and near-term production asset in swamp/shallow waters offshore Nigeria.
· ADM acquires a 51% interest in K.O.N.H. UK Limited (“KONH”) (the “Investment”), which holds a 70% indirect interest in the rights, benefits and obligations under the RSA relating to the Barracuda area of OML 141
· ADM will provide technical and financial support to the RSA Consortium in return for favourable accelerated economics and a 15% Net Profit Interest in the Field
· New work programme to be produced by the RSA Consortium and joint operators
· New CPR on the Field expected to be completed in the coming months
· ADM’s internal estimate suggests that first oil of 4,000 barrels of oil per day (“bopd”) may be possible in H2 2021
· ADM considers that there may be an opportunity to further increase Field productivity from further drilling. Following the receipt of the CPR and further technical appraisal work, it may be possible to:
o Increase production to ca.23,000 bopd by drilling six wells by 2026
o Develop a 12km pipeline to Brass Export Terminal, reducing operating expenditure to US$12/bbl (from US$20/bbl).
Details of Payment
Following completion of the Investment, ADM has paid US$0.25 million (approximately £180,000) in cash and US$0.55 million (approximately £395,000) . As a result, ADM has issued 5,657,912 in ordinary shares of 1 pence each at 7 pence per share. The New Ordinary Shares are being issued to Calabar Capital Limited which, on admission of the New Ordinary Shares to trading on AIM. Of the issued share capital of the Company. Calabar Capital Limited has entered into a lock-in agreement with the Company not to dispose of any shares issued to it in consideration for the investment for 12 months after the issue of any such consideration shares, save for in certain limited circumstances or upon the prior written consent of the Company.
The overall consideration for the Investment may total up to US$1.3 million payable in cash and equity. The remainder of the consideration is contingent on demonstrating commercial flow rates from the first new well, and payable as follows:
· US$0.1 million in ordinary shares of ADM issued at the higher of 7p and the five-day average of the then prevailing share price upon signing of drilling contract for the Barracuda-5 well
· US$0.4 million in ordinary shares of ADM issued at the higher of 7p and the five-day average of the then prevailing share price on completion of a successful flow test in respect of the Barracuda-5 well.
Osamede Okhomina, CEO of ADM Energy plc, said: “We are delighted to complete our investment and acquire a controlling interest in a Risk Sharing Agreement for the development of the Barracuda Field. The expectation is for Barracuda Field to come on stream later this year following the drilling of a new well, which, if successful, should give ADM a considerable increase in production volumes and cashflows. With the potential for several new wells in the coming years, we believe this investment and the Barracuda Field represents a compelling opportunity to add significant value to ADM.”