ADM Energy, a company investing in natural resources, has conditionally agreed to invest a total consideration of up to $1.3m in the development of the Barracuda oil field in Nigeria.

Under the terms of the agreement, the company will acquire a 51% stake in K.O.N.H. UK (KONH), which holds an indirect interest in a Risk Sharing Agreement (RSA) for the Barracuda field.

Form the total consideration, ADM is expected to make $250,000 payment in cash, upon closing of the transaction, and the remaining consideration will be settled in equity.

Dubai Bridge Investments chairman HE Zubair Al Zubair said: “We partnered with ADM at the end of last year because their strategy aligned with our own of seeking out investment opportunities in the energy sector in Africa.

“The Barracuda Field, an attractive near-term production asset with significant potential upside, is the type of excellent opportunity we envisioned when we first decided to collaborate with ADM.

“Our planned financial backing combined with ADM’s extensive contacts and breadth of experience of the region and the oil and gas industry forms a formidable partnership and we look forward to building a long-term relationship.”

The Barracuda field is an existing discovery and near-term production asset, located in oil mining licence OML 141, in the swamp/shallow waters of the Niger Delta in Nigeria.

Covering 1,295 km2 , the licence area consists of four existing wells, of which three were drilled in 1967 by Tenneco, and one by CNOOC in 2007.

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

A fifth well is being planned to be drilled in order to carry out a flow test in fourth quarter 2021. If successful, the well will be brought onstream.

ADM estimates to recover up to 73 million barrels from the D-1B reservoir, based on existing Barracuda data and field analogues.

The company considers that there is a potential opportunity to further increase field productivity through the drilling of five additional wells over the coming years.

ADM Energy CEO Osamede Okhomina said: “This is a compelling investment opportunity that provides ADM with the potential to access near-term production upside at minimal risk.

“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.

“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.”