ADDAX Petroleum Corporation has been awarded an additional 7.2 per cent participating interest in Block 4 of the Nigeria/Sao Tome and Principe Joint Development Zone (JDZ) by an independent arbitration tribunal.
A statement released by the company disclosed that the award increases Addax Petroleum’s interest in the license area from 38.3 per cent to 45.5 per cent. Addax Petroleum is also the operator of Block 4.

President and CEO of Addax Petroleum, Jean Claude Gandur, said, “This award further enhances our leading position in this world class exploration region. I am very excited about the prospective oil resources of Addax Petroleum’s entire deepwater portfolio and I am looking forward to launching our high impact drilling campaign. Due to our interests across four JDZ license areas, a focused drilling strategy will be undertaken to include a consecutive exploration campaign of up to 10 wells across the region to demonstrate the full potential of these assets. I believe these exploration assets will be an important contributor to the growth of the company and will deliver value to our shareholders.”

In 2007, Addax Petroleum and ERHC Energy Incorporated (ERHC) entered into arbitration proceedings in respect of a 9 per cent participating interest in JDZ Block 4 that had been committed to a third party. When that party failed to fulfil its obligations, the 9 per cent reverted to Addax Petroleum and ERHC. Under the arbitration proceedings, Addax Petroleum claimed entitlement to 7.2 per cent of the 9 per cent interest, subject to the carried costs associated with the balance, being the 1.8 per cent to which ERHC was entitled.

A panel of the London Court of International Arbitration confirmed that Addax Petroleum is entitled to the 7.2 per cent additional interest for no additional monetary consideration beyond the $18 million previously paid by Addax Petroleum to ERHC. Addax Petroleum will continue to carry the costs associated with ERHC’s 19.5 per cent interest in JDZ Block 4.

Addax Petroleum has contracted to commence drilling operations in JDZ Block 4 in the fourth quarter of 2008, but believes that the drilling rig will not be delivered until the second half of 2009. In the interim, the Corporation continues to seek a rig of opportunity to drill the 458 MMbbl Kina prospect in JDZ Block 4 as early as the fourth quarter of 2008.

Recently, Addax Petroleum Corporation announced the attainment of a historic milestone of 200 million barrels of oil production from the Addax Petroleum operated Oil Mining Lease 123 offshore Nigeria.
OML123, the Corporation’s first Nigerian license and largest license by production and reserves volumes, is located in the shallow water offshore in the Niger-Delta Basin, one of the most prolific petroleum basins in the world. The OML123 license area covers approximately 90,700 acres (367 km (2)) and is located offshore approximately 60 km south of the town of Calabar in the south-eastern part of Nigeria. As at December 31, 2007, Netherlands, Sewell & Associates Inc. estimates the Corporation’s gross proved plus probable reserves for OML123 to be 161.4 MMbbl and gross proved plus probable plus possible reserves to be 220.6 MMbbl.

In addition, as at December 31, 2007, NSAI estimates the Corporation’s best estimate contingent resources for OML123 for gas to be 999.9 Bcf and for associated liquids to be 27.9 MMbbl, and gross best estimate unrisked prospective oil resources for identified prospects on OML123 to be 401.2 MMbbl (110.3 MMbbl risked). Addax Petroleum is currently producing just under 60 Mbbl/d from 51 wells in 7 producing fields.