Canadian oil and gas exploration company Africa Energy Corp. has terminated a farm-out agreement with a subsidiary of Pancontinental Oil & Gas to acquire a 10% participating interest in Petroleum Exploration License 37 offshore Namibia (PEL 37).
To remind, the two companies entered the farm-out agreement on November 29, 2016.
Under the terms of the agreement and similar to the terms of Pancontinental’s participating interest, the company’s participating interest share of all joint venture costs, including the drilling of the first exploration well on PEL 37, was supposed to be fully carried through the current exploration period by a joint venture partner.
Africa Energy has agreed to pay Pancontinental $1.7 million at the close of the farm-out agreement, and an additional $4.8 million upon spud of the first exploration well.
Africa Energy said on Thursday that it exercised its right to terminate the agreement as a result of due diligence procedures performed by the company which identified discrepancies in respect of certain agreed commercial terms of the transaction.
In a separate announcement on Friday, Pancontinental said that Africa Energy reached out to the company on January 16, 2017, wanting to restructure the agreement. However, since the duo failed to conclude a mutually satisfactory revised agreement within the given period for negotiation, the farm-in agreement has lapsed.
Since the deal was not completed, Pancontinental still holds a 30 percent equity interest in PEL 37. The other partners in the PEL are Tullow with 65 percent interest and the operatorship and Paragon Oil & Gas with the remaining five percent.
Offshore Energy Today Staff