Tende Energy Takes Full Ownership Control of ATOG Midco Limited

Source: www.gulfoilandgas.com 6/26/2023, Location: Africa

Tende Energy (“Tende”) is pleased to announce that it has taken full ownership control of ATOG Midco Limited, together with its subsidiaries (“ATOG”), having acquired a further 90% equity interest in ATOG. In consideration, Tende has provided funding to be deployed for future development of the assets across the ATOG portfolio.

The acquisition consolidates ownership of a portfolio of three onshore producing assets in the Ghadames basin, one of which is operated by ATOG, and an offshore operated licence in the Gulf of Hammamet, which contains the fully appraised Cosmos discovery. The acquisition has been supported by our strategic funding partner, Trafigura, and complements our production and development assets in Nigeria and our forthcoming acquisition of the significant producing interests in Angola.

The portfolio in Tunisia is currently producing approximately 800 boepd from the three onshore licences:
One operated by ATOG: Bir Nen Tartar (100% Working Interest “WI”);
Two operated by ENI: Adam (5% WI) and Borj el Khadra (10% WI);
The increased infrastructure capacity facilitated by the newly commissioned Nawarra gas pipeline ($1.2 billion investment by its owner) should enable increased production at the ENI-operated licences, which were previously production constrained.

The portfolio includes the appraised Cosmos discovery, which ATOG operates and owns an 80% interest (ETAP 20%). The original discoveries achieved a combined flow rate of 5,700 bopd under well test and recently updated estimates provide an Estimated Ultimate Recovery (“EUR”) of 15-20 mmboe. The licence contains mapped but undrilled structures which provide significant resource upside and provide the basis for a significant offshore development hub. The Company is expediting plans for the development of the Cosmos discoveries, in conjunction with ETAP, and expects to submit an updated development plan to the Tunisian authorities in the coming months.

Commenting, Bobo Kuti, CEO, Tende Energy, said: “We are pleased to have completed the acquisition of ATOG and look forward to growing production and cash flows from the portfolio, in particular bringing the valuable Cosmos asset onstream.

“We continue to progress the proposed acquisition of the Angolan offshore assets, working alongside our partner, Etu (formerly Somoil). The interests in blocks 18 and 31 represent significant future growth for the Company and are in line with the strategy to build our producing capacity.

“Our operations team is advancing and accelerating its work with NNPC’s upstream group, Nigeria Exploration and Production Limited, Baker Hughes and the joint venture COPDC team regarding the further development of OML 65 – initially focused on the incremental production from the Abura field. We are also continuing to undertake further appraisal work in OML 65 and look forward to providing further updates on our operational progress.

"Our focus is to increase production and cash flow by developing our portfolio of valuable projects while working to de-risk the unique set of exploration opportunities within the portfolio.”

The Company continues to work toward a successful re-Admission of the Company’s shares to trading on London’s AIM in the second half of the year.

Notes: Nigeria OML65 and Angola Transaction

Angola offshore producing interests
The Company announced in 2022 that the Tende-Etu consortium signed a legally binding SPA with Sonangol to acquire participating interests of 8.28% and 10% respectively in the producing Angolan offshore Blocks 18 and 31 and a 25% participating interest in the exploration Block 27 (“the Transaction”).

The economic effective date of the Transaction is April 2022 and completion is expected to take place in the second half of 2023, subject to customary conditions and approvals. The Consortium has paid a deposit of US$18.525m representing 5% of the total consideration and the balance payable for the proposed Acquisition will be financed through the provision of facilities from the Company. The Transaction is conditional upon satisfactory due diligence (“DD”) being completed, the payment of the net consideration and the receipt of Ministerial approval.

Angola Portfolio Summary
Acquiring non-operated interests in prolific deepwater production assets with strong cash flow characteristics.
Current gross production from Blocks 18+31 is averaging c.120,000 bopd.
Net production entitlement to the Consortium expected to average 11,000 bopd.
Significant cash flow entitlement given low operating costs and historic unrecovered costs
Major medium and long-term development upside.
Tende-Etu will be making targeted investments in Sonangol social projects in Angola as part of its committed strategy of working with partners to improve lives through sustainability initiatives in the community.

Block 31 – Producing
Acquiring a 10.0% interest for a total consideration of US$205m.
Unrecovered brought forward development cost balance of c.$14bn boosts contractor group entitlements, enhancing overall EBITDA/bbl and long-term returns.
The Block is operated by Azule Energy (“Azule”), the recently formed company that combines the Angolan upstream interests of BP and ENI, and is located offshore some 400 kilometres north west of Luanda.
The block consists of four producing oil fields; Plutăo, Saturno, Vénus and Marte (“PSVM”), which were discovered between 2002 and 2004 in water depths of up to 2,000 metres in the North East part of Block 31. PSVM is the second Azule-operated development in Angola and production started up in December 2012. Licence partners are currently Azule (26.67%), Equinor (13.3%), Sinopec International (15%), Sonangol (45%).
Current gross production from the block is averaging c.60,000 bopd.
Gross 2P/2C reserves of 275mmbbls relate to existing production and sanctioned developments, according to the operator.
Further gross 2C resources of 516 mmbbls from existing discoveries, according to Gaffney Cline & Associates.
Further acquisition consideration payments are contingent on sustained high oil prices (>=$75/bbl) and first oil from long-term developments.

Block 18 – Producing
Acquiring an 8.28% interest for a total consideration of US$165m.
The block is operated by Azule and is located offshore, 160 kilometres northwest of Luanda. Eight discoveries have been made in this block, of which the fields Galio, Cromio, Cobalto, Paladio, and Plutonio make up the first producing complex known as Greater Plutonio.
Production started in 2007 from Greater Plutonia while the Platina development was brought onstream in late 2021, adding significant volumes and reserves to total block production. Licence partners are currently Azule (26.67%), Equinor (13.3%), Sinopec International (15%), Sonangol (45%).
Current gross production from the block is averaging c.60,000 bopd.
Gross 2P/2C reserves of 220mmbbls relate to existing production and sanctioned developments, according to the operator.
Further acquisition consideration payments are contingent on sustained high oil prices (>=$75/bbl) and first oil from long-term developments.

Block 27 – Exploration
The Consortium is acquiring a 25.0% non-operated interest in this deepwater exploration and appraisal block for a total consideration of US$0.5m.
The block is located offshore in the Kwanza basin, an area known for its gas potential.

Nigeria OML 65
In 2021, the Company announced its entry into the joint venture company, COPDC Petroleum Development Company Limited (“COPDC”). Under the agreements, Tende became a 30 per cent shareholder in COPDC, which has executed agreements with Nigeria’s national oil company, NNPC Limited, regarding the further development of the OML 65 licence, onshore Nigeria.

OML 65 is a producing onshore block with 2P reserves of 51 mmbbls, according to a Gaffney Cline & Associates CPR dated May 2021:
The existing producing field, Abura, has been in production since the 1970s, has been ascribed 16.2 mmbbls remaining 2P reserves1 and is currently producing c.10,500 bopd.
OML 65 also contains two further discovered and appraised fields, Owopele and Osioka, which have not been developed to date and will form part of the forward work programme. The two discovered fields contain an estimated 34.9 mmbbls additional 2P reserves 1.
In addition, there are two targeted deeper prospects at Abura and Osioka containing an additional 227mmbbls oil in place1.
The existing production facilities and infrastructure servicing the Abura field are capable of handling up to 40,000 bopd.

Tende and COPDC have assumed de-facto operatorship of the block and will lead an Approved Work Programme (“AWP”) to develop and produce the remaining reserves on OML 65. There was no consideration paid related to the entry into the JV or related to the execution of the Financial and Technical Services Agreement (“FTSA”) with NNPC.

The Company signed a Master Services Agreement with Baker Hughes for the provision of drilling related services for the further development of the Abura field, representing Phase 1 of the AWP and involving the drilling of up to 9 development wells. Baker Hughes is providing its equipment and services on a fixed-price contract basis. The first phase of the AWP is estimated to boost production by up to 11,000 bopd.

The Company executed a Facility Agreement with Trafigura for the provision of the funding required for the execution of Phase 1 of the AWP, with the first tranche drawn in November 2022. The Company also executed agreements with a range of institutional investors for the provision of US$15m of subordinated funding, to support the Trafigura senior facility, related to the Phase 1 development.

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