Equator owns the right to acquire a 100% working interest in two blocks of its choice in the EEZ. In addition, the company has an option to take up to a 15% share in any eventual participation by the government in any other block in the EEZ. Equator also has interests in seismic data acquired in the JDZ and the EEZ.

Equator has funded the acquisition of 10,000 km of 2D seismic data and interpreted more than 20,000 km across this frontier acreage. The company’s regional and prospect work was initially carried out through PGS Reservoir and is nearing completion. Seismic data shows widespread prospectivity and hydrocarbon potential similar to deepwater blocks in Nigeria and Equatorial Guinea. Four play types have been identified with the presence of a number of leads and prospects.

Equator anticipates the delineation of blocks to be completed by the end of 2006. Upon completion of the block delineation, Equator plans to select two option blocks and commence negotiations on production sharing contracts (PSCs) with the government for each block. Once the PSCs are finalised, Equator will undertake a 3D seismic program on each block prior to farm-out and drilling of the two blocks.

 

Equator has signed a PSC for Block 2 in the Joint Development Zone between Nigeria and São Tomé & Príncipe. Equator’s original allocation of a net 6% equity interest was increased to 9% when the company farm-in to the interest of another participant.

Of the remaining interest, 65% is held by a consortium of Sinopec (operator), ERHC Energy and Addax Petroleum. The Nigerian firms, Amber Petroleum and Foby Engineering, hold 5% each. Some 15 prospects and leads have been identified in the block, four of which are very significant. The partners are actively searching for a deepwater drilling rig. Equator has posted a guarantee for its share of one obligation well in the first 5 year exploration phase of the PSC.

Block 2 is adjacent to Nigerian Block OML 130 which hosts the Akpo field, with reserves of 800 million barrels and 4 tcf, and a series of further discoveries with reserves totalling additional 500 million barrels and several tcf of gas. In 2006, CNOOC purchased a 45% working interest in OML 130 for US$2.68 billion.

The Obo 1 discovery in the adjacent JDZ Block 1 has proven the existence of a working hydrocarbon kitchen and excellent reservoir sands in the region of Block 2, confirming its good prospectivity.