Tap Oil announced that it has entered into a Petroleum Agreement to secure a 36% interest and Operatorship of the Offshore Accra Contract Area, off the coast of Ghana, Africa.

The Petroleum Agreement between Tap, its joint venture partners, the Republic of Ghana and the Ghana National Petroleum Corporation (GNPC) has been approved by the Minister and Cabinet and we are awaiting written confirmation that it was ratified by the Parliament of the Republic of Ghana on 24 March 2010.

Tap will be the Operator of the joint venture which includes Challenger Minerals and AFEX International. The Offshore Accra Contract Area covers an area of 2,000 sq km (Figure 1) and is located to the southeast of Accra, the capital of the Republic of Ghana, in water depths ranging from less than 50 meters to greater than 2,500 meters.

Excellent Oil Potential

The Offshore Accra Contract Area is located in an emerging oil province on the West Africa Transform Margin, along the northern Gulf of Guinea. A number of discoveries have been made in analogous geological settings along the Margin, including the Espoir and Baobab producing fields in neighboring Cote d’Ivoire.

In 2007, the Jubilee field was discovered by Kosmos Energy and Tullow Oil (one of the largest oil discoveries in the world in 2007) establishing a new deepwater play offshore Ghana. According to Tullow, recoverable oil reserves for the Jubilee field are estimated to be 1.2 billion barrels. Subsequent discoveries (Tweneboa and Odum) have further demonstrated the significant potential that exists along the Margin.

Several moderate risk but high reward structures have been identified on existing 3D seismic data in shallow-moderate water depths in the Contract Area, each of these is considered to have potential to contain in excess of 100 million barrels of prospective resources. One of these is likely to be the initial drilling candidate in 2011 or early 2012. Deepwater leads similar to the recent Jubilee discovery will be the subject of future seismic programs to confirm and mature them into prospects for drilling.

Commercial Terms

The initial application for the Offshore Accra Contract Area was made prior to the Jubilee discovery and negotiations continued through the 2008 elections and under the new government. The Contract Area has a modest initial committed exploration program consisting of 3D seismic reprocessing, acquisition of 850km of 2D seismic data and a single exploration well over the next two and a half years.

The terms of the Petroleum Agreement are confidential but are consistent with other Petroleum Agreements in Ghana which are considered attractive on a global ranking. The Agreement terms and the supportive host government provide an attractive reward for effort in the event of a discovery.

The Contract Area is located over the West African Gas Pipeline which provides immediate access to expanding energy markets in this growing region for any gas discovered as part of the program.

The participants in the Petroleum Agreement are:

Tap Oil (Ghana) Limited  36%
Afex Oil (Ghana) Limited  27%
Challenger Minerals (Ghana) Limited  27%
Ghana National Petroleum Company  10%

Tap’s joint venture partners in the Contract Area are:

Challenger Minerals Inc. (CMI) is a subsidiary of Transocean Ltd, the world’s largest offshore drilling contractor. CMI participates in exploration and appraisal opportunities around the world and provides the joint venture with the potential to access Transocean’s fleet of 138 offshore drilling rigs and effectively manage drilling risk through CMI’s drilling affiliate, Applied Drilling Technology International.

AFEX Oil (Ghana) Limited is an affiliate of AFEX International, Inc which is a private, US-based company with West African experience, including Ghana and discoveries in Cote d’Ivoire and most notably in Equatorial Guinea with the Zafiro Field (1.2 billion barrels).

Ghana National Petroleum Corporation was established by the Republic of Ghana to undertake exploration and production activities in Ghana and hold the State’s participating interest in those activities.

Mr Peter Stickland, Tap’s Managing Director / CEO commented:

“We believe the significant potential of the Offshore Accra Contract Area makes it a compelling opportunity that enhances our existing portfolio of activities. Our New Ventures team have worked hard over the last few years on many opportunities with few meeting Tap’s challenging acceptance criteria. It’s a credit to our team’s foresight and ability to have successfully concluded the Petroleum Agreement with the government during a period when the Jubilee discovery has created intense international interest in the region. As well as the very attractive exploration potential, Ghana’s long term economic and government stability played an important role in our assessment process.

Over the next 12 months Tap remains focused on delivering the opportunities it has developed in Australia and South East Asia, while Offshore Accra represents an early entry opportunity for longer term growth with drilling likely in 2011/12. Tap is pleased to have successfully concluded the Offshore Accra Petroleum Agreement and to have been endorsed as the Operator for the Joint Venture and the Contract Area. We are looking forward to working with the joint venture and GNPC, a combination that represents a strong convergence of technical and operational skill and experience.”