African-focused independent CAMAC Energy has signed a Letter of Intent (LoI) that seals the long-term use of an FPSO (Floating Production, Storage and Offloading) vessel already producing on its deepwater Oyo field offshore Nigeria.

The Houston-based company said the LoI was signed regarding terms and conditions for the long-term agreement for the FPSO Armada Perdana, and specifying an initial term of five years effective as of 1 January this year. There will also be an automatic extension for an additional term of two years unless terminated by CAMAC with prior notice. A definitive agreement is expected to be signed on or before the end of this month, said the company.

CAMAC has one deepwater well – Oyo-7 – ready for completion, with the operator also planning to drill and complete the Oyo-8 and Oyo-9 wells this year. The company signed an LoI with Northern Offshore for the use of the drillship Energy Searcher in December (see DI, 16 December 2013, page 8). The drillship is expected to be delivered to the field in OML Block 120 during the first half of 2014. The LoI provides for an initial contract period of one year, with an option to extend the contract for an additional one-year term.

The FPSO Armada Perdana is owned and operated by floating production specialist Bumi Armada and can process up to 40,000 b/d of oil. It has an oil storage capacity of 1 MMbbl. At present it is producing around 2,000 b/d of oil and 1.1 MMcm/d (40 MMcf/d) of gas from the field.

CAMAC’s aim is to target the Pliocene and Miocene reservoirs in the area, with the short-term plan to produce approximately 21,000 b/d of oil once the Oyo-7, Oyo-8 and Oyo-9 wells are brought onstream. The Oyo-7 well last year hit gross oil pay of 41 m (133 ft) and gross gas pay of 31 m (103 ft) in a gas cap from the currently producing Pliocene reservoir, with excellent reservoir quality.

The Oyo field is located 75 km offshore in water depths of approximately 410 m (1,345 ft), with the block extending out to a water depth of up to 1,000 m (3,281 ft). The FPSO first arrived on the field in late 2009.

CAMAC is also under way with a US $300 million bond offering to raise the funds needed to drill and complete the next three wells.

It also closed a deal in December that saw it commit to paying up to $707.6 million to Allied Energy (a wholly-owned subsidiary of CAMAC Energy Holdings) in stock, cash and convertible debt to give it 100% ownership of OML 120 and OML 121.

Chairman and CEO Kase Lawal said the FPSO “has been instrumental in supporting our ongoing operations deepwater offshore Nigeria. It has historically provided a high utilization rate and we are pleased to have this long-term infrastructure in place that will allow us to execute our development and exploration program”.