CAMAC Energy Inc. is hoping to “significantly increase production from the Oyo Field”, the company says in a statement announcing the spud of Oyo-8 development well in Oil Mining Lease (OML) 120 offshore Nigeria.
The field has had a troubled history, with a dramatic fall in output from the 25,000BOPD at first oil in 2009, to 4,000 BOPD less than 18 months after and now at 2,000BOPD. Italian giant ENI, who brought the field online, walked out of the asset in June 2012, selling its 40% stake to Allied Energy, a subsidiary of Camac.
Camac commenced drilling of Oyo-7 in 2013, promising to get to first production from the well in the fourth quarter of the same year, “upon delivery of previously ordered long-lead items related to well completion”. It didn’t happen.
Located approximately 75 kilometers offshore Nigeria in water depths of approximately 300 meters, Oyo was discovered in 1995 by Allied, with seismic data indicating that the field held more than 45 million barrels of proved and probable recoverable reserves of light 34.50 API crude oil. The field wasn’t fully appraised until 2006 when Allied signed a production agreement with ENI and turned over operatorship to the company. The Italian explorer appraised the field and drilled Oyo 2, and then drilled four additional wells during the next several years. Once appraisal drilling was completed, the operator stated Oyo now held an estimated 50 million barrels of proven oil reserves. Today, the presence of a 40,000BOPD FPSO on a field that has not produced anywhere near two thirds of that in five years, is the most visible testimony that Oyo Field was probably overstated. But Camac, a loss making company until the South African Public Investment Corporation (PIC) financed it with $270Million late last year, insists that Oyo-7 and -8 will turn around the field’s and its own declining fortunes.
Oyo-8 is being drilled by Northern Offshore Ltd’s Energy Searcher drillship to a total depth of approximately 1,800 meters in water depths of approximately 310 meters, and will produce from the Pliocene reservoir. The JSE listed Camac Energy expects the well to commence production in the fourth quarter 2014, after which the previously drilled Oyo-7 well will also be completed, in order to “significantly increase production”, the company says in a release.