By Emeka Nze
Calm is yet to return to OMLs 120 and 121 since Erin Energy, New York and Johannesburg-listed company, filed for bankruptcy aimed at debt restructuring and financial capability.
This is because one of the shareholders of Erin Energy, Robert Lenois has questioned the sincerity of the board of directors of the company to have approved and acted in favour of the decision leading to the bankruptcy which he considered an unfair transaction. Lenois has expressed his discontentment through a lawsuit challenging Erin Energy.
Though a Delaware Chancery judge had thrown out Lenois’ lawsuit challenging Erin Energy, its Chairman and CEO, Kase Lawal and other directors are not happy with Lenois’ action, which they believe, has further damage the reputation of the company. For them, it is a double tragedy as the acreages are yet to yield result, including the Oyo Field which held so much prospects.
To compound their woes, Agip (ENI) was recognized as the operator of OMLs 120 and 121 by a Lagos High Court which had upheld the ruling in London in early 2017 to transfer the management of OML 120 and 121 to Agip, thus further amplifying the challenges face by Erin Energy.
OMLs 120 and 121 were awarded for twenty year terms to Allied and Camac International in 2002. Oyo Field, located off the coast of Nigeria, is included in these Oil Mining Leases. In 2005, Allied and Camac International conveyed a 40% interest in the Oil Mining Leases to Nigerian AGIP Exploration Limited (“NAE”), and the three entities entered into a production sharing contract governing their relationship with the Oil Mining Leases (the “Production Sharing Contract”).
In 2010, Erin (then known as Pacific Asia Petroleum, Inc.) acquired a portion of Allied’s and Camac International’s rights in the Production Sharing Contract relating to the Oyo Field in exchange for giving CEHL $32 million, 62.7% ownership in Erin, and an agreement to pay an additional $6.84 million within six months of the consummation of the transaction (the “2010 Acquisition”). CEHL also gave Erin a right of first refusal for a period of five years as to any licenses, leases, or other contract rights for exploration or production of oil or gas owned by CEHL. After the 2010 Acquisition, the Erin board was expanded from five members to seven members, and CEHL nominated four new directors, including Lawal, who was appointed non-executive Chairman.
In February 2011, Erin purchased all of Allied’s and Camac International’s Production Sharing Contract rights not related to Oyo Field. In June 2012, Allied entered into a contract to purchase the remainder of NAE’s interests in the Oil Mining Leases and the Production Sharing Contract in exchange for $250 million of cash consideration plus certain adjustments, leaving Allied and Erin as the only owners of the Oil Mining Leases and the only entities subject to Production.