History

From the 17 March 2006 until the 16 March 2012, Equator held a 9% participating interest in Block 2 in the Nigeria and S‹o TomŽ & Pr’ncipe Joint Development Zone (ÔJDZÕ).

Other participants in the PSC were Sinopec (28.67% operator), ERHC (22.00%), Addax (14.33%), ONGC Videsh (13.5%), Amber Petroleum (5%), Foby Engineering (5%) and A & Hatman (2.5%). In 2009, Foby and Amber went into default on the payment of cash calls. ONGC resigned from the block in June 2010.

An exploration well, Bomu 1, was drilled in 1655 metres of water between the 29 August 2009 and the 3 October 2009. The well reached a total depth of 3543 metres below sea level achieving all of its geological objectives. It was completed under budget by approximately US$ 10 million. The well fulfilled the work obligation of Phase I of the Exploration Period in the PSC.

The well encountered reservoir sands and traps largely as expected but the discovery of only biogenic gas in a number of the sand intervals rather than oil was disappointing. The Phase 1 Exploration Period was extended for a total of two years to allow a thorough technical and commercial evaluation of the Bomu discovery and the remaining prospects on Block 2. As well as using the data gathered from Bomu 1, Sinopec was also able to include the regional information from four other wells drilled in Blocks 3 and 4 in the studies.

The studies confirmed that the small Bomu gas discovery is sub-commercial under current conditions. An adequate source of oil is believed to exist but no faults are seen to provide a migration path for oil between the source rocks and the reservoir sands. The studies also concluded that the best remaining prospect is more likely to contain gas than oil, in quantities not very much larger than those discovered in Bomu. This did not justify commitment to a second exploration well, as required for entry into Phase II of the PSC.

With the possible exception of ERHC, which was carried through Phase I, the participants, including Equator, elected to exit the block.