Gross production from OML 30 has reached over 50,000 bopd, in part from the benefit of continued maintenance and rehabilitation programmes. As a result of successful community relations programmes, production from the Uzere West Field recommenced in December 2013 after having been shut-in for over two years. In 2013, average production net to Heritage was 8,919 bopd at an average realised price of $114.70/bbl for total net revenues of $423 million. These revenues include November and December 2012 production sold in 2013. Production in Q4 2013 averaged c.13,300 bopd net to Heritage, 63% higher than the average of c.8,150 bopd for the first nine months of the year.
The development of OML 30 remains the priority for the Company. All existing facilities have been reviewed to identify opportunities for improvement and maintenance. A number of comprehensive operational, engineering and community projects that commenced in 2013 are generating and contributing to significant production increases.
Gas lift is the method of artiﬁcial lift within OML 30 and six of the eight ﬁelds have gas lift installed, with the two remaining ﬁelds planned to have gas lift installed within the next two years. Work on the gas lift systems continues and the installation of new gas lift compressors procured in 2013 is nearing completion. A further five new gas compressors have been ordered to be installed later this year. In addition, replacement of gas lift engines for the existing compressors, installation of diesel generators and replacement of the instrument air compressors is in progress.
Wellhead maintenance has been completed on wells throughout the licence in preparation of flow line and gas line repairs. An extensive list of well optimisation activities continues to be refined. Over the course of this year work will continue aimed at further optimisation of the existing wells and facilities.
The drilling of new wells, planned to commence in the second half of 2014, should provide a significant increase to production with the longer term potential estimated at approximately 300,000 bopd gross.
OML 30 lies onshore within the Niger Delta in one of the most proliﬁc oil and gas provinces in the world. The licence covers 1,097 square kilometres and includes eight producing ﬁelds with oil and gas contained in numerous stacked reservoirs. The ﬁelds are deltaic shallow marine shelf sands at intermediate depth. The ﬁelds each contain up to 40 stacked reservoirs and the reservoirs are underlain by substantial aquifers that provide nearly inﬁnite pressure support. The oil is good quality 30° API and typically sells at over a 2% premium to Brent.
Since 1961 over 200 wells have been drilled on the licence and the strong aquifer support has enabled the majority of these to be producers. There is the potential to both stabilise and increase production in the near term through refurbishing infrastructure and restarting non-producing existing wells. Additionally, existing wells will be worked over to further increase production.
The licence beneﬁts from infrastructure being in place with nine ﬂow stations that have the capacity to handle 395,000 bpd thereby allowing for the projected production growth. The facilities have been robustly designed and constructed, and beneﬁt from a standard design so equipment can easily be replaced if required.
The OML 30 acquisition included a 45% interest in the segment of the TFP that transports liquids from OML 30 to the Forcados Terminal. The 97 kilometre long pipeline is 26 inch in diameter and largely buried along most of its length. It has a capacity of 850,000 bpd. The TFP is used by several other operators and provides additional revenue for OML 30 through the tariffs charged. Maintenance and construction work was also undertaken on the Trans Forcados Pipeline (“TFP”) to complete work that was initiated by the previous operator but delayed due to the prolonged sales process.
In Nigeria, engagement with local communities is fundamental to driving an improved performance from the licence and in generating shared wealth to all stakeholders. To this extent, a not for profit Non-Government Organisation (“NGO”), registered and working in Nigeria and West Africa for over 20 years, was engaged to work with the National Petroleum Development Company, the operator, and Shoreline to ensure a cohesive approach to community issues. Conclusions from extensive consultations with communities within the OML 30 licence area allowed Shoreline to gain an understanding of the fundamental issues of concern arising from activities in the area. This enabled Shoreline to engage accordingly in the interest of the impacted communities as well as helping to restore and build an environment such that all can benefit.
In December 2012, Heritage announced that Shoreline Power had exercised its call option to acquire a 30% economic interest in Shoreline. Completion of the transaction is expected imminently, following which Heritage will have an effective working interest in OML 30 of 30.71%. On completion, Heritage will receive cash of $31.5 million and the balance will be provided by way of an interest bearing, secured loan from Heritage to Shoreline Power.
In November 2013, Heritage announced that a wholly owned subsidiary has entered into a joint venture agreement with Bayelsa Oil Company, owned by the Bayelsa State government and another Nigerian company, to establish an indigenous Nigerian oil company called Petrobay. Heritage has a 45% equity interest in Petrobay which combines Bayelsa Oil Company’s indigenous support from state government and Heritage’s strong technical and financial capability.
A number of upstream assets in the state of Bayelsa and the larger Niger Delta region have been identified and Petrobay will engage in both bilateral and competitive auction processes to acquire these assets. Petrobay will look to enable Heritage to build upon its current interests in Nigeria, which is Africa’s largest oil producer and contains the second largest oil reserves in the continent.
OML 30 – SUMMARY Of RESERVES(1,2)
||Gross Remaining Reserves
||Heritage Group Net
||Gross of Royalty (mmstb)
||Net of Royalty (mmstb)
Probable & Possible
1 Post exercise of Shoreline Power option.
2 As per RPS, as at 31 March 2012.