ADM Energy has conditionally agreed to acquire a stake in the Barracuda oil field located in oil mining licence (OML) 141 in the swamp/shallow waters of the Niger Delta in Nigeria.

The company will acquire a 51% stake in KONH UK, which in turn, owns a 70% indirect stake in a risk-sharing agreement (RSA) on the Barracuda field via Noble Hill – Network.

For the field development, ADM would pay up to $1.3m. This includes $250,000 in cash payment on completion of the deal and the remainder in equity, on completion and at certain project milestones.

The deal is planned to be completed in the second quarter of this year.

ADM also plans a $500,000 fundraiser by way of a subscription for new ordinary shares to finance its plans. It will be conducted through an accelerated bookbuild.

ADM Energy CEO Osamede Okhomina said: “The Barracuda Field in OML 141 fits our strategy to target near-term production assets in proven oil and gas jurisdictions and will establish ADM Energy as a multi-asset player in Nigeria.

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“We will bring technical and financial support to the consortium to develop the asset and take it into production in the second half of this year.

“We have structured the deal to receive an accelerated cash entitlement once the field is in production, with the intention that the cost of the first well will be supported by our financing partner, Dubai Bridge Investments.”

An existing discovery, the Barracuda field consists of four existing wells, of which three were drilled in 1967 by Tenneco, and one by CNOOC in 2007.

These wells penetrated oil-bearing high-quality C3 and D-1B sands in the area, which are typical of the stacked delta top and pro-delta reservoirs in faulted listric settings.

A fifth well, Barracuda-5, is planned to be drilled in the field. Upon successful completion of flow test in the fourth quarter of 2021, the Barracuda-5 well will be brought onstream, ADM said.

According to ADM estimates, the D-1B reservoir has recoverable resources of up to 73 million barrels, based on existing Barracuda data and field analogues.

ADM considers the field to have the potential for increased productivity through the drilling of five additional wells in the coming years.