Eland Oil & Gas has agreed to acquire a 40% participating interest in the Ubima Field, onshore Niger Delta, from Allgrace Energy.
Based in the northern part of Rivers State, Ubima is estimated to host 34 million barrels of oil.
A significant potential upside in the form of a 3C resource is expected to host 66.9 million barrels with an extra 2C resource estimate of 97 billion cubic feet of gas in two reservoirs.
Four wells were drilled in Ubima between the 1960s and 1980s, and hydrocarbons were discovered in each of the reservoirs.
Allgrace will receive a $7m signature payment and a $3m production bonus after securing ministerial approval.
Meanwhile, Wester Ord Oil & Gas, the Eland subsidiary making the acquisition, will be entitled to 88% of the production cash flow from the field until the costs are recovered.
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By GlobalDataThe field has been carved out of Oil Mining Lease (OML) 17, which is held by Nigerian National Petroleum Corporation, The Shell Petroleum Development Company of Nigeria, Total E&P Nigeria and Nigerian Agip Oil Company.
Eland Oil & Gas CEO Leslie Blair said: "The acquisition of Ubima is a very attractive and accretive deal for Eland on very positive terms.
"As the technical and financial partner, we will be able to lead the development and move quickly to bring these assets into early production, generating strong cashflow for the benefit of all stakeholders."
The Ubima field is near the existing infrastructure for the delivery of crude to market and Wester Ord is currently in negotiations with the Shell Petroleum Development on the crude export tie-in point.
