US independent ERHC Energy is to plough around $100 million into exploration on a single block off Sao Tome & Principe after firming up a production sharing contract this week, according to a report.
The Houston-based player will spend the funds on seismic acquisition and drilling on EEZ Block 11 in the West African archipelago nation’s exclusive economic zone (EEZ), Reuters reported, quoting company president Peter Ntephe.
ERHC, as had been expected, put pen to paper on a PSA for EEZ Block 11 on Wednesday and also has 100% of EEZ Block 4, also in the EEZ. The company held preferential rights over both blocks.
Upstream reported in February that the explorer was ready to sign “early stage” PSAs for both blocks, with action on EEZ Block 11 expected first as recent geophysical analysis of reprocessed data suggests significant potential beyond earlier estimates.
ERHC plans to acquire aeromagnetic and gravity data ahead of shooting 2D seismic and 3D seismic, with a focus on EEZ Block 11, the most prospective of the two licences earmarked under a right-of-first-refusal established a decade ago.
“The PSC is already negotiated, and we could sign today, but we first need to get final agreement on how to direct our efforts most efficiently by taking stock of the data,” one senior ERHC executive told Upstream in February.
“We need to make a choice, so let’s be sure.”
Sao Tome & Principe in early February shortlisted four companies for block awards in its latest licensing round. Portugal’s Galp Energia was joined by London-listed New World Oil & Gas in bidding for EEZ blocks 1 and 6. UK-based London Global Energy was shortlisted for EEZ Block 6, while Blue Skies World Group has its eye on EEZ Block 1.
Nigerian independent Oranto Petroleum landed EEZ Block 3 in May last year, while ERHC Energy has preferential rights for EEZ blocks 4 and 11.
As with ERHC at EEZ blocks 4 and 11, Equator Exploration has preferential rights over EEZ blocks 5 and 12, leaving EEZ blocks 1, 2, 6, 7, 8 and 13 formally unallocated.
The Nigeria-Sao Tome & Principe Joint Development Zone (JDZ) was established in 2001 as an area of overlapping maritime boundary claims between the two states under a 45-year treaty, allowing Nigeria access to 60% of petroleum resources and revenue.
Nigerian explorer Oranto Petroleum took 100% of JDZ Block 5 last year, while China’s Sinopec operates JDZ Block 2 and Addax Petroleum JDZ blocks 3 and 4.