Syntroleum and Sovereign complete formation of Nigerian industry group

Jan 14, 2005 01:00 AM

Syntroleum and Sovereign Oil & Gas announced they have completed the formation of an industry group to undertake the appraisal and development of the Aje Field in Oil Mining Lease (OML) 113, offshore Nigeria.
Upon government approval, the Aje Field/OML 113 venture group will consist of: Yinka Folawiyo Petroleum -- Operator, Lundin Petroleum -- Technical Advisor, Syntroleum, Palace Exploration, Challenger Minerals, Providence Resources, Howard Energy.

The Aje Field/OML 113 Project, located forty miles southwest of Lagos, is the first project that Syntroleum and Sovereign have completed under their March 2004 Joint Development Agreement (JDA). The JDA charges Sovereign with sourcing proven stranded natural gas assets for Syntroleum's proprietary GTL (gas-to-liquids) Barge technology, and with assisting Syntroleum in obtaining equity in and in assembling upstream industry groups to develop such assets.
On Oct. 7, 2004, Syntroleum and Sovereign executed a Joint Venture Agreement (JVA) with OML 113's license holder, Yinka Folawiyo Petroleum (YFP). The JVA grants Syntroleum 100 % of the foreign investor's participation interest in OML 113 in exchange for a firm drilling commitment to further appraise the Aje Field, an undeveloped crude oil, condensate and natural gas discovery made by YFP in 1997.

Due to the large volumes of natural gas present in the Aje Field YFP was seeking a participant who could provide a commercial means of monetising the natural gas, in addition to developing the discovered crude oil and condensate volumes. YFP signed with Syntroleum based on Syntroleum's GTL Barge technology, a proprietary process that converts natural gas into ultraclean diesel fuel, naphtha, and LPG products on a barge-mounted facility to be located in OML 113's Aje Field area.
As part of the JVA commitment, not later than Jan. 15, 2005 Syntroleum and Sovereign were to assemble an industry group with the requisite technical and financial capability to assist YFP in the development of the Aje Field, which is located in deep water approximately forty miles southwest of Lagos.

The afore-mentioned group of seven companies are prepared to undertake the development of an integrated crude oil, condensate, and GTL project in the Aje Field, subject to the successful drilling of one or more appraisal wells in the field, to be drilled as soon as practicable following Nigerian government approval of the assignments to the farmees.
Syntroleum's President and CEO Jack Holmes said, "We are extremely pleased to announce the successful formation of this premier industry group to undertake the further appraisal and development of the Aje Field in OML 113. It was only ten months ago that Syntroleum and Sovereign signed the JDA, and I couldn't be more pleased with our progress. We are right on schedule with the Aje Field, and we have a number of other exciting projects at various stages of development in West Africa and the Middle East. We have renewed and extended our exclusive JDA with Sovereign and look forward to capturing more stranded natural gas and liquid petroleum reserves for our shareholders in 2005 and beyond."

Joe Bruso, Sovereign's President and CEO, said, "Our JDA with Syntroleum has worked out extremely well, and we are delighted with this early confirmation of our business model. Syntroleum brings not only its unique GTL technology to our group, but also the vision and know-how to take its technology upstream as an equity participant in projects like Aje.”
“Sovereign's extensive knowledge of proven undeveloped international oil and gas assets and our long experience working with indigenous asset owners and upstream industry players combines well with Syntroleum's strategy of moving upstream with its GTL technology. We look forward to continuing our exclusive JDA with Syntroleum, and to bringing new upstream oil and GTL projects to fruition in 2005."

Source: AsiaPulse
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