Nigeria’s Transcorp to start drilling plans after oilfield deal with NNPC

Lagos, Nigeria | – Nigeria’s leading diversified conglomerate, Transnational Corporation of Nigeria Plc (Transcorp), which has interests ranging from agriculture to oil, said it will drill wells on its prospecting lease after signing a production-sharing deal with the Nigerian National Petroleum Corporation (NNPC).

Transcorp paid $30 million for oil-prospecting lease 281, or OPL 281, following a sale by the Nigerian government in 2007. The lease holds an estimated 104 million barrels of oil reserves, 335 million barrels of probable additional reserves and about 4 trillion cubic feet of gas, the Lagos-based company said today in an e-mailed statement.

The addition of OPL 281to its portfolio of oil and gas assets, the company said Sunday in a statement is another milestone in its becoming a leading integrated energy company, operating in production, refining, power generation, petrochemical and fertiliser production.

Transcorp, 44 percent owned by Elumelu, was set up in 2004 to invest in industries in Africa’s biggest economy. It bought the Ughelli gas-fired power plant last year following a government sale of former state-owned utilities. Its market value has increased almost tenfold to 142.9 billion naira ($900 million) since 2008.

Tony Elumelu, chairman of Transcorp was quoted as saying that “OPL 281 is rich with nearly 4 tcf of natural gas, and will support the newly-expanded Ughelli power plant for up to 25 years at 2000 MW per day. This volume of reserves also guarantees 15 years of feedstock supply for our future fertilizer and petrochemical plants, which will utilize the gas stores to bring value for Nigerians locally, instead of the wastage in flaring and environmental destruction that has historically characterised the industry.”

The company plans to raise $1 billion to build power plants as it seeks to triple profit this year, Chief Executive Officer Obinna Ufudo said on April 11.

Transcorp will partner with Energy Equity Resources, a Nigerian oil and gas company, and Johannesburg-based SacOil Holding Limited (SCL) in the ownership and development of OPL 281, the company said.

The stock climbed as much as 9.9 percent, the biggest intraday gain since March 6, to 3.76 naira and traded 7.9 percent higher at 3.69 naira by 12:53 p.m. in Lagos.