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Canadian Overseas Petroleum secures US$7mln performance bond from Nigerian bank

“The company expects the performance bond to be in place to the satisfaction of the regulatory authorities in the coming weeks, at which point activities on OPL 226 can be commenced in earnest”
offshore nigeria
COPL wants to start drilling at OPL 226 this summer

Canadian Overseas Petroleum Limited (LON:COPL) has secured a US$7mln performance bond from a Nigerian bank which will allow it to start work at its OPL 226 licence offshore Nigeria.

At the end of last year, the state-run National Nigerian Petroleum Corporation (NNPC) granted conditional approval for a two-year extension of the phase 1 production sharing contract (PSC) subject to certain conditions, including the submission of a performance bond of US$7mln.

READ: COPL looks to mid-year for Nigerian finance

COPL expects the performance bond to be in place in the coming weeks, at which point “activities on OPL 226 can be commenced in earnest”.

“We are now well placed in the development of our strategically important Nigerian asset as we look to commence drilling of the appraisal wells later this year,” said Arthur Millholland, president and chief executive.

“This is a key step to enable COPL to become a successful mid-tier oil and gas company. We look to the future with confidence given the imminent commencement of operations and the recent evaluation of our Nigerian asset's resources.”

COPL said in January that it hopes to start appraisal drilling at OPL 226 in mid-2019, subject to finance.

Financing talks ongoing, drill rig secured

The company needs to arrange project finance of US$100mln and equity of a further US$20mln, which in turn will trigger a US$30-50mln offtake deal agreed with Mauritius Commercial Bank and commodities trading group Trafigura.

In terms of the US$100mln project finance that is required, COPL repeated today that it is in “late-stage discussions” with an offshore oil services group about securing the money.

More immediately, the company has enough in the bank to keep going for “one to two months”, after which it will need a fresh injection of capital.

COPL said it is in talks with “certain shareholders and other organisations” to obtain the necessary funding.

In preparation for this summer’s expected drill campaign, the company has signed a non-binding letter of intent with an offshore drilling contractor for a brand new high-spec jack-up rig, which is currently undergoing final inspections.

Shares dropped 5.2% to 0.14p.

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