Participation in Nigeria's 2020 Marginal Field Bid Round

Source Company Press Release
Company Zenith Energy Ltd.
Tags Country: Nigeria, M&A: Licensing Round, Upstream: Upstream News
Date June 16, 2020

Zenith Energy Ltd." (Zenith" or the "Company") (LSE: ZEN; OSE: ZENA-ME), the listed international oil & gas production company focused on pursuing African development opportunities, is pleased to announce its participation, in the capacity of technical and financial partner to a Nigerian registered energy company, in the 2020 bid round for marginal oil and gas fields organised by the Nigerian Department of Petroleum Resources" (DPR").

Overview regarding the 2020 Nigerian Marginal Fields Bidding Round

On June 1, 2020, the DPR, on behalf of the Federal Government of Nigeria, announced the launch of a new a bid round for a total of 57 marginal fields covering a selection of onshore, swamp and shallow-offshore fields ("2020 Bid Round").

The overarching goal of the 2020 Bid Round, following a similar initiative completed successfully in 2001, is to stimulate local commercial participation in the Nigerian petroleum industry and thereby create opportunities for domestic economic development.

Further key objectives of the 2020 Bid Round include the following:

·    Growing production capacity by increasing the scope of participation in Nigeria's petroleum sector, through diversification of resources and inflow of investments;

·    Increasing oil and gas reserves through aggressive exploration and development efforts

As part of the 2020 Bid Round guiding principles, there is an expectation that the development of these marginal acreages will engender various opportunities to attract international capital and technological expertise in partnership with local Nigerian companies.  

Under the guidelines provided by the DPR for the 2020 Bid Round a marginal field ("Marginal Field") is defined as any field that has been discovered and has been left unattended for a period of not less than ten (10) years from the date of first recovery, or any such field as the President of the Nigerian Federal Government may, from time to time, identify as a Marginal Field.

The 2020 Bid Round is a process comprised of various stages commencing with pre-qualification of the companies with relevant technical and financial capabilities and duly registered in Nigeria to carry out Exploration and Production by DPR, followed by submission of a commercial and technical bid for evaluation under a number of criteria by the Honourable Minister of Petroleum Resources ("HMPR"), and concluding itself with the potential assignment of a Marginal Field once all necessary formalities have taken place and final approval from the President of Nigeria, pursuant to the Petroleum Act (1969), is obtained.

Non-equity development funding

The Company can confirm that it is progressing in negotiations, first announced to the market on March 2, 2020, with an international oil major in order to provide funding for Zenith's development objectives in Africa in the form of an offtake agreement.

Further, the Company has also entered into negotiations with two pan-African financial institutions for a loan facility that will be used to fund the acquisition and development of Zenith's growing portfolio in West Africa.  

Andrea Cattaneo, Chief Executive Officer, commented:"

Zenith has had ambitions to establish a presence in Nigeria for a number of years. The launching of the 2020 Bid Round for Marginal Fields, which has not happened since 2001, represents an exceptional opportunity for the Company and its Nigerian partner to acquire an underdeveloped, potentially transformational oil production and exploration asset in the current low oil price environment. 

Among the 57 Marginal Fields included in the 2020 Bid Round, there are specific assets which are particularly appealing to Zenith, especially on account of their compatibility with our development objectives. Indeed, the near-term production potential of certain assets is expected to facilitate the achievement of financing agreements to support our expansion. We expect the potential award of a Marginal Field, following the 2020 Bid Round process, to happen within 6 months of bid submission.

I look forward to updating the market in due course regarding our very exciting progress in Africa".  

Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd