Addax Petroleum Announces Agreement To Acquire Interest In Deepwater Joint Development Zone
To acquire a 40 per cent working interest in JDZ Block 1
Calgary, Alberta, September 25th, 2007 – Addax Petroleum Corporation (“Addax Petroleum” or the “Corporation”) (TSX:AXC and LSE:AXC), today announces that its has agreed to acquire Esso Exploration and Production Nigeria-Sao Tome (One) Limited’s 40 per cent working interest in Block 1 of the Joint Development Zone (the “JDZ”). The JDZ lies in the deepwater between Nigeria and Sao Tome and Principe in the Gulf of Guinea which is one of the most prolific petroleum regions in the world.
Commenting today, Addax Petroleum’s President and Chief Executive Officer, Jean Claude Gandur, said: “This acquisition will expand and consolidate our leading position in this world class exploration region. The addition of Block 1 to our existing interests in JDZ Blocks 2, 3 and 4 is consistent with our strategy that a focused, JDZ-wide exploration campaign will demonstrate the full potential of the region and bring about its earliest development. In that respect, Block 1 is particularly important as it already contains a well which encountered hydrocarbons and has several further prospects. I believe this acquisition to be an important building block in our broader deepwater Gulf of Guinea portfolio that will deliver value to our shareholders and stakeholders.”
Addax Petroleum and Esso Exploration and Production Nigeria-Sao Tome (One) Limited have entered into a sale and purchase agreement whereby Addax Petroleum has agreed to acquire Esso Exploration and Production Nigeria-Sao Tome (One) Limited’s 40 per cent working interest in Block 1 and, as consideration, to pay US$77.6 million and 2 per cent of Addax Petroleum’s share of profit oil produced from Block 1. Completion of the sale and purchase agreement is subject to the approval of the Joint Development Authority of the JDZ.
Block 1 is operated by Chevron, which holds a 45.9 per cent working interest. Block 1 is located approximately 300 kilometres offshore Nigeria in water depths ranging from 1,600 to 1,900 metres, directly west of JDZ Block 2 and directly north of JDZ Blocks 3 and 4. Block 1 contains the only well drilled to date in the JDZ, Obo-1, which is significant because it encountered hydrocarbons when drilled in 2006. There are no further exploration commitments on Block 1 during the current exploration period.
Addax Petroleum continues to hold the largest acreage position in the JDZ, as tabulated below.
| Addax Petroleum's working interest | |||
| Block | % | Acres | Operator |
| Block 1 | 40.00% | 69,600 | Chevron |
| Block 2 | 14.33% | 24,500 | Sinopec |
| Block 3 | 15.00% | 24,700 | Anadarko |
| Block 4 | 38.30% | 81,100 | Addax Petroleum |
| Total | 199,900 | ||
The oil prospectivity of Blocks 2, 3 and 4, but not Block 1, as announced by Addax Petroleum on May 22, 2007, was previously assessed by the Corporation’s independent reservoir engineers, Netherland, Sewell and Associates (“NSAI”). NSAI reviewed 18 prospects on Blocks 2, 3 and 4 and estimated unrisked and risked prospective oil resources respectively to be 286 MMbbl and 225 MMbbl attributable to Addax Petroleum’s working interest as at December 31, 2006.
The Corporation, along with Sinopec, has contracted the Aban Abraham deepwater drillship to drill up to ten exploration and appraisal wells, commencing during the fourth quarter of 2008, in the JDZ and at OPL291, the Corporation’s other deepwater Gulf of Guinea license area.
About Addax Petroleum
Addax Petroleum is an international oil and gas exploration and production company with a strategic focus on West Africa and the Middle East. Addax Petroleum is one of the largest independent oil producers in West Africa and has increased its crude oil production from an average of 8,800 bbl/d for 1998 to an average of approximately 123,000 bbl/d for the second quarter of 2007. Further information about Addax Petroleum is available at www.addaxpetroleum.com or at www.sedar.com.
Legal Notice – Forward-Looking Statements
Certain statements in this press release constitute forward-looking statements under applicable securities legislation. Such statements are generally identifiable by the terminology used, such as “anticipate'', “believe'', “intend”, “expect”, “plan”, “estimate”, “budget'', “outlook'', “may”, “could”, “should”, “would” or other similar wording. Forward-looking information includes, but is not limited to, reference to business strategy and goals, future capital and other expenditures, reserves and resources estimates, drilling plans, construction and repair activities, the submission of development plans, seismic activity, production levels and the sources of growth thereof, project development schedules and results, results of exploration activities and dates by which certain areas may be developed or may come on-stream, royalties payable, financing and capital activities, contingent liabilities, environmental matters, the ability to consolidate a JDZ-wide exploration position, the prospectivity of JDZ Block 1 and the ability to satisfy all of the conditions of the JDZ Block 1, including the approval of the Joint Development Authority. By its very nature, such forward-looking information requires Addax Petroleum to make assumptions that may not materialize or that may not be accurate. This forward-looking information is subject to known and unknown risks and uncertainties and other factors, which may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such information. Such factors include, but are not limited to: imprecision of reserves and resources estimates, ultimate recovery of reserves, prices of oil and natural gas, general economic, market and business conditions; industry capacity; competitive action by other companies; fluctuations in oil prices; refining and marketing margins; the ability to produce and transport crude oil and natural gas to markets; the effects of weather and climate conditions; the results of exploration and development drilling and related activities; fluctuation in interest rates and foreign currency exchange rates; the ability of suppliers to meet commitments; actions by governmental authorities, including increases in taxes; decisions or approvals of administrative tribunals; changes in environmental and other regulations; risks attendant with oil and gas operations, both domestic and international; international political events; expected rates of return; and other factors, many of which are beyond the control of Addax Petroleum. More specifically, production may be affected by such factors as exploration success, start-up timing and success, facility reliability, reservoir performance and natural decline rates, water handling, and drilling progress. Capital expenditures may be affected by cost pressures associated with new capital projects, including labour and material supply, project management, drilling rig rates and availability, and seismic costs. These factors are discussed in greater detail in filings made by Addax Petroleum with the Canadian provincial securities commissions.
Readers are cautioned that the foregoing list of important factors affecting forward-looking information is not exhaustive. Furthermore, the forward-looking information contained in this press release is made as of the date of this press release and, except as required by applicable law, Addax Petroleum does not undertake any obligation to update publicly or to revise any of the included forward-looking information, whether as a result of new information, future events or otherwise. The forward-looking information contained in this press release is expressly qualified by this cautionary statement.
For additional information, please contact:
Mr. Patrick Spollen
Investor Relations
Tel.: +41 (0) 22 702 95 47
patrick.spollen@addaxpetroleum.com
Mr. Craig Kelly
Investor Relations
Tel.: +41 (0) 22 702 95 68
craig.kelly@addaxpetroleum.com
Ms. Marie-Gabrielle Cajoly
Press Relations
Tel.: +41(0) 22 702 94 44
marie-gabrielle.cajoly@addaxpetroleum.com
Mr. Mac Penney
Press Relations
Tel.: +1 (416) 934 80 11
mac.penney@cossette.com
Mr. James Henderson
Press Relations
Tel.: +44 (0) 20 7743 6673
james.henderson@pelhampr.com
Mr. Alisdair Haythornthwaite
Press Relations
Tel.: +44 (0) 20 7743 6676
alisdair.haythornthwaite@pelhampr.com
This announcement does not constitute an offer of, or the solicitation of an offer to buy or subscribe for, common shares of Addax Petroleum to any person in any jurisdiction to whom or in which such offer or solicitation is unlawful and, in particular, is not for release, publication or distribution in or into the United States, Australia or Japan.
The offer and sale of the common shares has not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act") and may not be offered or sold in the United States unless registered under the Securities Act or an exemption from such registration is available. No public offering of common shares of Addax Petroleum is being made in the United States.
Certain statements in this announcement are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties described in the Prospectus that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements.