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NIGERIA: San Leon Energy an Update on its Indirect Interest in OML 18

  • Eroton completed its three well drilling programme in early 2020, with the final completion and flow of these wells impacted by Covid-19. The recent lower oil price has led Eroton to improve capital discipline and the prudent deferral of the next drilling campaign, now expected to commence towards the end of 2021.
  • Eroton informs the Company that it has taken all appropriate precautions for its operations and people, with regards to Covid-19.
  • Oil delivered to Bonny terminal for sales was approximately 25,200 barrels of oil per day in H1 2020 (32,000 bopd in H1 2019) and continues to be affected by combined losses and downtime of approximately 32%. The 2020 figure has also been affected by OPEC oil production quota restrictions. Together, the losses, downtime and OPEC restrictions cause the majority of the difference between gross production when there is no disruption to production, and oil is received at Bonny terminal for sales.
  • Gas sales averaged 39.1 million standard cubic feet per day (mmscf/d) in H1 2020 after downtime (34.3 mmscf/d in H1 2019).
  • Production downtime of 15% in H1 2020 was caused by third party terminal and gathering system issues. Such issues in the third-party export system are expected to be substantially resolved by the implementation of the new ACOES for the purpose of transporting, storing and evacuating crude oil from OML 18 export Pipeline”. The Pipeline will run from within the OML 18 acreage to a dedicated Floating Storage and Offloading (FSO) vessel in the open sea, approximately 50 kilometres offshore. Expected timing for the commencement of operations is in the coming quarters.
  • Pipeline losses by the Bonny Terminal operator have been relatively stable over the past year (30 June 2020: 20%; 30 June 2019: 18%). In the longer term, the export Pipeline and FSO system mentioned above are expected to reduce losses significantly.
  • Chief Executive Officer of San Leon, Oisín Fanning, commented:‘The Company’s position and outlook remains strong.

    ‘Whilst the world and the industry has been through turbulent times, we have taken advantage of the opportunities presented by this as well as utilising our cash position to further build our portfolio in Nigeria in line with our strategy. Our investment in ELI will support the reduction in pipeline losses and downtime at OML 18 whilst also providing loan note repayments as well as equity returns.

    ‘Our strong position is expected to continue in the year ahead as we receive further Loan Note payments and deliver upon our strategy.’

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