| Fri 20 Feb 2004, 8:07 | | Exxoteq Limited - AGREEMENT ON ANGOLAN OFFSHORE |
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Exxoteq Limited - AGREEMENT ON ANGOLAN OFFSHORE BLOCKS 5 AND 6; AND
RENEWAL OF CAUTIONARY
Exxoteq Limited
(Formerly Wild Rush Trading 12 Limited)
Registration number 2002/010132/06)
Share Code: EXO : ISIN ZAE000050183
("Exxoteq" or "the company")
- AGREEMENT ON ANGOLAN OFFSHORE BLOCKS 5 AND 6; AND
- RENEWAL OF CAUTIONARY
Introduction
LPC Manhattan Sponsors (Pty) Ltd is authorised to announce that further to the
Cautionary Announcement dated 26 November 2003, agreement has been reached with
Strong Energy Resources LLC ("Strong") of Texas, USA for Exxoteq to participate
in the rights granted to Strong by Sociedade Nacional de Combustiveis de Angola
("Sonangol") in respect of Angolan offshore blocks 5 and 6 ("the areas"), which
include the Cegonha Oil Field.
Exxoteq has a 95% participation in Strong"s exclusive rights to undertake an
analysis of the technical data and seismic reports relating to the area and
jointly prepare, with Sonangol, the development plans for any commercially
exploitable fields found in the area. In terms of the agreement with Strong,
Exxoteq will carry Strong for its 5% participation interest in the project and
undisclosed conditional fees which are contingent upon successful milestone
achievements. Further terms of the agreement with Strong are given below.
Blocks 5 and 6
Blocks 5 and 6 are located offshore Luanda in Angola and contain four discovered
fields being Cegonha, Muamba, Pakubalu and Mubafo. These fields are covered by
a 3D seismic survey.
It is understood that the Cegonha area consists of five large structures two of
which have been tested. The initial discovery, 12 km offshore, found an
estimated 360 million barrels of 18× API oil throughout the Mucanzo sands and
oolitic carbonates of the Catumbela. Lighter hydrocarbons can also be expected
in the Cegonha area. The Muamba discovery, 12 km to the northwest, flowed 800
barrels of 30× API oil per day from the Catumbela. A large structure, west of
the Cegonha discovery has the added advantage of reserve potential in both the
pre-salt and post-salt sequence.
In the Mubafo structure, the largest in a family of over ten structures, between
25 and 50 million barrels (three reservoirs in Mucanzo and Catumbela) were
found and 24× API flowed at nearly 1200 barrels of oil per day. Five wells were
drilled in the Mubafo area, with two being discoveries (Pakubalu, 800 barrels of
oil per day) flowing oil from the Mucanzo and Catumbela. Two additional wells
had good shows.
All of the wells in Blocks 5 and 6 that penetrated the Cuvo interval had signs
of oil migrating updip. The available 3D survey will assist in unlocking a
structurally and stratigraphically complex area. The seismic data provides
better definition of known reservoirs, improved structural definition and could
assist in identifying additional traps.
Process of getting into production
The process of getting into production starts with the conclusion of a
memorandum of understanding with Sonangol in respect of the study area. This
has been achieved. A field study and implementation plan has just been started
and will be developed to determine the reserves of the existing discoveries and
generate geological leads and prospects for the purpose of developing the
oilfields for hydrocarbons. A third party report will also be undertaken to
review and validate the study. Estimated cost of this entire exercise is US $550
000. This plan will then be presented to Sonangol for approval. If approved by
Sonangol, Strong will have the right to make an offer to develop the areas. It
should be noted that bank funding becomes increasingly available upon successful
milestone achievements.
Agreement with Exxoteq Corporation
Angola Blocks 5 and 6 also appear to be well suited to showcase the Floating
Production, Storage & Offloading (FPSO) technology developed in the United Arab
Emirates by Exxoteq Corporation (Overseas). Comprehensive rights for the use
and application of this innovative technology rest with Exxoteq, vide an
agreement, which enables Exxoteq to exploit the oilfields efficiently and
effectively with the back-up techno-commercial support of the overseas entity,
as may be required.
Effect on Exxoteq
The effects on Exxoteq of these arrangements will only be able to be calculated
once the reserves have been more fully assessed and once further agreement has
been reached between Sonangol and Strong. However, there is a high degree of
likelihood that Angolan offshore blocks 5 and 6 contain significant quantities
of commercially viable oil, the extraction of which is likely to have a
significant beneficial impact on the company.
Renewal of Cautionary
Shareholders are advised to continue to exercise caution when dealing in their
shares in the company until agreement has been reached between Strong and
Sonangol regarding the development of the areas and the company is in a position
to release the financial effects. An announcement in this regard will be made
as soon as possible. Further unrelated negotiations, which are considered to be
in the normal course of business, are also in progress. Details will be
communicated to shareholders as appropriate.
