Horizon Petroleum Ltd. (“Horizon” or the “Company”) (TSXV: HPL) is pleased to report that further to the Company’s press release of November 9, 2015, under which the Company announced that it had entered into a letter agreement (the “Agreement”) for the farm-in to an offshore exploration block in West Africa, exclusivity has been granted to Horizon by the operator of the block (the “Farmor”). The exclusivity will remain in place until the earlier of July 31, 2016, and the date that the Farmor and Horizon enter into a definitive Farmout Agreement (the “FOA”).
Under the terms of the Agreement, Horizon will be assigned a 50% working interest of the undivided legal and beneficial right, title and interest in and under the Production Sharing Contract (“PSC”) covering the block in Cameroon, and entered into between the Farmor and the Republic of Cameroon on June 16, 2008. This is subject to a 25% back-in right in favour of the Societe Nationale des Hydrocarbures (“SNH”), the national oil company of Cameroon upon a declaration of commerciality.
Horizon will be required to fund 100% of the cost to drill and test an appraisal well to earn the 50% interest. The well is designed to be the final appraisal well of an existing light oil discovery within the block with estimated recoverable resources of approximately 18mmbbls to 52mmbbls(Company management estimate). The well will also test shallower prospective reservoirs which have been defined through 3D seismic and which are productive in major fields nearby in the same sedimentary basin which could contain mean unrisked recoverable resources of approximately 90 mmbbls with an estimated chance of success of around 30%.
The carried well will likely be drilled during the first half of 2017. The cost of this well is estimated at between US$25 and US$35 million depending on the number of reservoir zones tested. The Farmor carry is capped at US$35 million; any drilling and testing costs in excess of the US$35 million cost cap will be borne by Horizon and the Farmor as to their working interest share. If the Joint Venture declares the well a commercial discovery, Horizon has agreed to carry the Farmor through an additional $70m of appraisal and development work, for a total potential expenditure of up to US$105 million. The additional carried work is part compensation to the Farmor for the 50% share of the historical cost recovery pool. Expenses in excess of the costs caps will be borne by Horizon and the Farmor as to their working interest share.
The offshore block is approximately 230 km2 in area, and is located in the prolific Rio Del Rey Basin, offshore western Cameroon; the eastern extension of the prolific Niger Delta region of Nigeria. Water depths across the block range between 5 and 8 meters. The Farmor has acquired 3D seismic and drilled four wells in the PSC, resulting in the light oil discovery. The light oil discovery has been made with four wells with oil and gas reservoired in sands of the Late Miocene aged Agbada Formation. The reservoirs are very high quality sands with porosities in excess of 25% and permeabilities in excess of 1 Darcy.
These reservoirs are highly productive in neighbouring blocks in the Rio Del Rey Basin and the Niger Delta. Two wells have been production tested; the first flowed at rates of 13 mmscf/d gas and 602 bopd of 360 API gravity oil from two co-mingled sand reservoirs. The second was tested from the oil bearing reservoir only and flowed at rates up to 1,500 bopd before the test was terminated due to sand influx.
Reservoir engineering analysis of the test data indicates that the reservoirs should attain rates between 2,000 and 5,000 bopd with associated gas with appropriate completions and sand control mechanisms.
There is considerable additional exploration potential, for oil, gas, and gas condensate, in both shallow and deeper plays within the block. The Farmor estimates further unrisked potential in 3D seismic supported prospectivity in the Agbada Formation sands of 112 mmbbls (P50), with a further 1,250 bcf gas (P50) and 350 mmbbls condensate (P50) in the deeper sand reservoirs of the Early Miocene aged Isongo Member of the Akata Formation. The Isongo Member has been proven highly successful with large discoveries in the nearby Etinde Block operated by Bowleven plc with Lukoil and New Age plc.
With a declaration of a commercial discovery, the Joint Venture would commence development planning with targeted first oil in early 2019.
Horizon will complete an independent NI51-101 compliant reserve and resource evaluation report covering the oil discovery. The Company and the Farmor are finalising the specific terms of the FOA, with the intention of entering into the FOA as soon as reasonably practicable. The Company will release further information on the transaction, when available, and able to do so under the confidentiality terms of the Agreement.
Calgary-based Horizon is focused on securing opportunities with appraisal and development of oil & gas reserves in West Africa and the Black Sea region of Europe, with an initial focus on Cameroon and Bulgaria. The management and Board of Horizon consists of experienced oil & gas professionals, with significant international experience.
For further information, please contact:
Dr. David Winter
Dr. David Winter
President & CEO
+1 403 619-2957
David R. Robinson
VP Business Development
+1 403 399 9047
+1 403 870 1653
This press release contains “forward-looking statements” or “forward-looking information” (collectively referred to herein as “forward-looking statements”) within the meaning of applicable securities legislation. Such forwardlooking statements include, without limitation, forecasts, estimates, expectations and objectives for future operations that are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of Horizon. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by the words “expects”, “plans”, “anticipates”, “believes”, “intends”, “estimates”, “projects”, “potential” and similar expressions, or that events or conditions “will”, “would”, “may”, “could” or “should” occur or be achieved.
Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Horizon and described in the forward-looking information contained in this press release. Undue reliance should not be placed on forward-looking information. The material risk factors include, but are not limited to: the uncertainty of estimates and projections relating to production and reserves; fluctuations in commodity prices; the imprecision of reserve estimates and estimates of recoverable quantities of oil, natural gas and liquids; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; changes in tax laws; changes in royalty rates; and Horizon’s ability to implement its business strategy. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Failure to obtain the necessary approvals, or the failure of Horizon to otherwise satisfy the conditions of the Transaction, may result in the Transaction not being completed on the proposed terms, or at all.
Although Horizon believes that the material factors, expectations and assumptions expressed in such forwardlooking statements are reasonable based on information available to it on the date such statements were made, no assurances can be given as to future results, levels of activity and achievements and such statements are not guarantees of future performance. Horizon’s actual results may differ materially from those expressed or implied in forward-looking statements and readers should not place undue importance or reliance on the forward-looking statements. Statements including forward-looking statements are made as of the date they are given and, except as required by applicable securities laws, Horizon disclaims any intention or obligation to publically update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.