US junior ERHC is in talks with at least one player over a potential deal to farm out stakes in one or more of its blocks in the Joint Development Zone (JDZ) between Nigeria and Sao Tome & Principe, writes Eoin O'Cinneide.

The Houston-based company is looking to shed stakes in three of its six blocks in the tract, which sits 180 kilometres south of Nigeria in the Gulf of Guinea.

ERHC is looking for partners in blocks 2, 3 and 4, chief executive Peter Ntephe said at the Africa E&P Summit in London last week.

The company has a 30% interest in Block 2, a 20% interest in Block 3 and a 25% interest in Block 4. However, it has a right to increase its stake to up to 60% in one or more of the blocks.

Ntephe told Upstream the company is ideally looking to farm down around two-thirds of whatever maximum interest it will have in each of the blocks.

Although the company is effectively working as operator at present, Ntephe said it would not intend to be operator after a farm-out.

Ntephe said ERHC is already in discussions with at least one company, which he would not identify, about a possible farm-in, adding that water depths at the JDZ mean majors or larger independents would be more suited as partners.

The JDZ covers almost 35,000 square kilometres, with water depths ranging from 1500 to 4000 metres.

Total recently re-entered the JDZ, having signed production sharing agreements for blocks 7, 8 and 11 earlier this year. The French supermajor had previously held Block 1, which it took over from Chevron.

ERHC also has stakes in blocks 5, 6 and 9, but Ntephe called blocks 2, 3 and 4 the company’s “marquee assets” in the JDZ.

The company, along with Addax and Sinopec, drilled five wells across the latter three blocks between 2009 and 2010, encountering “numerous hydrocarbon-bearing reservoir sands”, Ntephe said.

Bomu-1 in Block 2 confirmed a hydrocarbon-bearing structure and fond gas, while Lemba-1 was drilled in Block 3 and Block 4 saw three wells drilled — Kina-1XR, Oki-East-1X and Malanza-1.

The Nigeria–Sao Tome and Principe Joint Development Authority (JDA) is aiming to hold a fresh licensing round at the JDZ in the fourth quarter this year or first quarter next year.

Ibiwari Lorvde Jack, executive director, monitoring and inspection at the JDA, said at the same London summit that all open acreage would be put up for grabs.

To date, 11 blocks have been awarded in the JDZ, with about one half of the area currently unlicensed — all to the south.

Weekly

ERHC on hunt for farm-out