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Sirius Petroleum raises £2 million for oil drilling operations in Nigeria

22 Feb 2017, 01:12 pm
Financial Nigeria
Sirius Petroleum raises £2 million for oil drilling operations in Nigeria

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- Sirius Petroleum raised £2 million to commence drilling operations in Ororo marginal oil field located in OML 95.

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Sirius Petroleum, a UK investment company focused on oil and gas exploration and development opportunities in Nigeria, has raised £2 million to commence drilling operations in Ororo marginal oil field located in Oil Mining Lease 95 (OML 95) in Nigeria.

Chief Executive Officer of the company, Bobo Kuti, disclosed on Wednesday that the funds would be used for the procurement of equipment, such as wellheads, ‘christmas tree’ pipe and valve assemblies, and tubing hangers, for the scheduled drilling programme. The Ororo field lies in shallow waters, offshore Ondo State. Last year, Sirius Petroleum received approval to drill the Ororo-2A well from the Department of Petroleum Resources (DPR).

Quoted on the London Stock Exchange, Sirius Petroleum issued 266.67 million new shares at 0.75 pence per share to raise gross proceeds of £2 million. The company also agreed to issue additional 3.33 million new shares at the same price in settlement of fees.

Sirius Petroleum said it has received firm commitments from new and existing shareholders in respect of the subscriptions.

"We are advancing into the pre-drilling programme of activity and hence the requirement for the funds to support the mobilisation of key equipment and long lead items,” said Kuti. “We have been very pleased with the excellent support from existing and new shareholders in this oversubscribed placing."

Sirius Petroleum also said has cancelled the remaining convertible loan facility with Calvet International Ltd, a family investment office, which currently has an undrawn amount of £630,000. The deal will see Sirius make a £500,000 payment and reduce equity dilution to 59 million shares from 126 million.

Following the three-year extension to the Ororo field licence, Sirius signed an integrated project service agreement with Schlumberger, the world’s leading oilfield services company, for a three-well drilling campaign. The drilling operation was expected to commence in the first half of 2017. Sirius Petrluem's local partners in the licence are Guarantee Petroleum Company and Owena Oil and Gas. Other partners in the drilling operations are COSL Pan Pacific Drilling, and Add Energy.

An independent consultant estimates the oil field holds ‘significant potential’, with a projected ‘high case’ of 7.6 million to 20.5 million barrels of oil. Cantor Fitzgerald, a global financial services company, had advised Sirius Petroleum in 2015 to buy the Ororo field.

“In our view, the Ororo Field remains a highly attractive initial development asset for the company. The advantageous marginal field fiscal regimes, coupled with lower development costs and decreasing rig rates, make the asset both economical at both current crude oil prices and potentially at even lower prices,” Sam Wahab, an analyst at Cantor Fitzgerald, had said.


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