‘SacOil 233 defaults on its financial obligations in OPL 233’

OPL 233 is operated by Nigdel United Oil Company Limited (“Nigdel”); an independent indigenous oil and gas exploration and production company while SacOil 233 Nigeria Limited (“SacOil”), a subsidiary of SacOil Holdings Limited, a South African oil and gas exploration and production company, is one of its partners.
Sacoil has defaulted in the delivery of its financial obligations in OPL 233.
The OPL 233, which is being operated under the terms of a Production Sharing Contract (“PSC”), is currently at the 3D OBC seismic data acquisition stage. This will be followed by scheduled drilling activities.
Despite the progress made in the project, SacOil has consistently and continually failed to fulfil its financial obligations under the Agreements between the parties.
SacOil had earlier been plighted with various Board and management concerns heralding in the dissolution, reconstitution and restructuring of its Board of Directors in 2014.
Nigdel had thus, further to a prolonged and cumulative failure by SacOil to deliver on its financial obligations under the terms of the Farm-In Agreement (“FIA”) as well as Joint Operating Agreement (“JOA”), opened discussions with the company towards remedying the situation and fulfilling its obligations under the Agreements.
In an effort to manage SacOil’s default amicably for the benefit of the joint venture, Nigdel had proffered various alternatives including reviewing and reprioritizing its entitlements on the asset. SacOil’s continued failure, however, resulted in Nigdel, as Operator and non-defaulting party, issuing a formal Default Notice to Sacoil. The default notice period expired on 18 April, 2015 without any attributable remedy. In line with the express provisions of the FIA and JOA, Nigdel reserves the right to require that SacOil completely withdraw from the JOA and the contract in the OPL 233, thereby resulting in Sacoil’s loss of its title, rights and beneficial interest in the OPL 233 but has been cautious in exercising this option.
Rather than resolving the subsisting impasse on its default, SacOil has resorted to announcing its withdrawal from OPL 233 on Wednesday, May 20, 2015; a move calculated at misinforming both its shareholders and the public at large. It must be noted that Sacoil cannot validly withdraw from OPL 233 under the provisions of the FIA under which it has relied without remedying its existing default first. Furthermore, it is a defaulting party who has failed to meet its obligations under the joint venture.
The Chief Executive Officer of Nigdel, Chief Joseph Penawou, stated that “Nigdel remains committed to the success of OPL 233 located in the prolific Niger Delta Region of Nigeria, and will continue concentrating its resources towards the completion of its work program in adherence to the requirements of the PSC as well as its objective of positioning itself to be a strategic player in the Nigerian oil and gas industry, delivering superior returns from a sustainable asset portfolio”.
For:
NIGDEL UNITED OIL COMPANY LIMITED
Chief Joseph T. Penawou
Chairman/CEO.