By Sully Manope, in Port Harcourt
London listed minnow, San Leon Energy, has moved much closer to injecting the funds it says it plans to use to ramp up output from the Oza field, onshore Niger Delta, which has produced a trickle of crude oil: about 400Barrels of Oil Per Day, in the last one year.
San Leon will invest in Oza field, by way of both granting a loan to and taking equity interest in Decklar Resources Limited. San Leon will grant Decklar a loan of $7.5Million, and subscribe for a 15% equity interest in Decklar, with another $7.5Million.
Decklar, a Canadian player listed on the Toronto Stock Exchange, will re-enter Oza 1, perform a work over and drill a new well, to start with.
Oza field is held by and operated by Millenium Oil and Gas Company Limited, a Nigerian owned independent which won the field from the government in the 2003 marginal field bid round. Decklar is the holder of a Risk Service Agreement (RSA) with Millenium on the field. Translation: Millenium had been unable to properly optimize production from the field. Decklar is investing in the field, both technically and financially and the Risk Service Agreement is legal instrument to ensure that it makes back its investment and take some profit.
Decklar is raising money elsewhere for the ramp up, apart from the $15Million it has agreed it will receive from San Leon. It is trying to raise funds from private placement financing and secure a facility from a crude trading company, which is a subsidiary of an E&P major (most likely Shell Trading, but Decklar doesn’t say).
Decklar, indeed has announced it was completing a private placement financing for a total of just over CAD $4Million, (or $31.75Million) which will enable it to immediately advance operational activities to re-enter the Oza-1 well. Closing of this private placement is expected to provide sufficient funds to re-enter the Oza-1 well and to re-establish oil production at the Oza Oil Field.
“The previously announced debt funding plans, including the arrangements of which San Leon is part, are in the final stages of being concluded which will provide additional development funding for further operations and development drilling for the full development of the Oza Oil Field”, San Leon says in a statement “The current private placement, which will allow Decklar Petroleum to begin the Oza-1 well re-entry and production operations on an expedited basis, is expected to close by the end of February 2021.
Civil works required for the Oza-1 wellsite are complete, according to Decklar, including rebuilding of the access road, construction of a concrete drilling pad, a concrete mud pit, buildings and other facilities required for well re-entry and drilling operations and management. A drilling rig located near the field has been contracted and will be moved to the Oza-1 wellsite in the near term, and operations to perform the planned re-entry of the Oza-1 well will begin shortly thereafter. The recently completed drilling pad will be used for both the Oza-1 well re-entry and the first horizontal development well on the Oza Oil Field.
The funds proposed to be used from San Leon on Oza are now expected to be used on the drilling of the new well on the Oza structure.