San Leon Energy PLC Update on operatorship of OML 18 (7463S)
March 13 2023 - 6:01AM
UK Regulatory
TIDMSLE
RNS Number : 7463S
San Leon Energy PLC
13 March 2023
13 March 2023
San Leon Energy plc
("San Leon" or the "Company")
Update on operatorship of OML 18
San Leon, the independent oil and gas production, development
and exploration company focused on Nigeria, notes the press release
published in Nigeria by Eroton Exploration & Production Company
Limited ("Eroton") on 13 March 2023 about its ongoing operation of
the Oil Mining License (OML) 18 ("OML 18"). This press release in
in response to press speculation in Nigeria last week. San Leon's
economic interest in OML 18 is not impacted by a possible change of
operatorship of OML 18.
In its press release, Eroton has emphasised that it remains the
operator of OML 18 in line with the provisions of the Joint
Operating Agreement governing OML 18 ("JOA") and has made the
following points:
1. The purported attempt by the non-operators of OML-18; NNPC
Limited ("NNPC") and Sahara Field Production Limited ("Sahara")
(now known as OML 18 Energy Resource Limited) to appoint NNPC
Eighteen Operating Limited as operator of OML 18 is a breach of the
JOA as any dispute whatsoever between the parties must be addressed
by the dispute resolution provisions of the JOA. There can be no
removal of an operator without following these procedures and the
process is designed in such a way that notice requirements cannot
be waived, and the removal of an operatorship can therefore not be
carried out, without following the process provided in the JOA.
2. Eroton has issued a notice of arbitration to NNPC and Sahara
in accordance with the terms contained in the JOA to defend its
legal rights. Furthermore, Eroton has received a legal opinion that
it continues to remain as operator pending such resolution and that
this will be upheld by the courts of Nigeria. Eroton further notes
that the action taken by NNPC and Sahara sets a damaging precedent
in the oil & gas industry in Nigeria because due process has
not been followed.
3. Eroton took over operatorship of OML 18 in 2015 with a
production of 6,000 bbls/d and increased production to over 50,000
bbls/d of dry crude (75,000 bbls/d of gross liquids) in less than
24 months. Eroton was also recognized by NNPC as being one of the
two operators with the lowest technical cost per barrel in the
industry over that time period. This performance continued until
the wider industry became severely impacted firstly by COVID-19,
and then by the unprecedented level of crude theft and sabotage
plaguing the Niger Delta area since 2020.
4. Since Q4, 2021, the Government of Nigeria has received
virtually zero crude oil from any company utilising the Nembe Creek
Trunk Line ("NCTL"), a pipeline that is partially owned by NNPC,
owing to the force majeure declared by the NCTL operator and the
widespread vandalism and crude oil theft recorded in the region.
These criminal activities in the Niger Delta are well known and
continue to adversely affect the entire region. For example,
Eroton's crude oil receipts dropped steadily in 2021, culminating
in zero receipt in November 2021 at Bonny Terminal. This was
despite efficient wellhead production data showing produced volumes
of over 500,000 barrels of oil for the same month. Consequently,
and in agreement with its partners in OML 18, Eroton shut in the
wells.
5. Eroton subsequently undertook an alternative means of
evacuating its crude oil from OML 18 using barges, a project funded
entirely by Eroton and with no financial support from its
partners.
6. Eroton further states that the allegations of improper
actions by it are baseless and unfounded and categorically denies
any fraudulent acts as stated in the in certain press reports.
Further announcements will be made as appropriate.
Enquiries:
San Leon Energy plc +353 1291 6292
Oisin Fanning, Chief Executive
Julian Tedder, Chief Financial Officer
Allenby Capital Limited
(Nominated adviser and joint broker to San Leon) +44 20 3328 5656
Nick Naylor
Alex Brearley
Vivek Bhardwaj
Panmure Gordon & Co
(Joint broker to San Leon) +44 20 7886 2500
James Sinclair-Ford
John Prior
Tavistock
(Financial Public Relations) +44 20 7920 3150
Nick Elwes
Simon Hudson
Plunkett Public Relations +353 1 230 3781
Sharon Plunkett
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