Genel Energy announces that it has agreed to farm in for 75 per cent of Mediterranean Oil and Gas Plc’s (MOG) licence interests to explore for and produce oil and gas in the Area 4 Offshore Malta (“Area 4”).
Under the Transaction, Genel Energy will acquire a 75 per cent participating interest in the Area 4 Offshore Malta Production Sharing Contract (“PSC”) from Phoenicia Energy Company Limited (“PECL”), a wholly owned subsidiary of MOG. The consideration comprises an initial payment of $10 million in recognition of past costs, plus a 100 per cent carry on the first exploration well and a 100 per cent carry on the second well of up to a maximum of $30 million gross cost. These will be funded from the Company’s existing cash resources. PECL will remain operator of Area 4 until the completion of the first exploration well, at which time Genel Energy can elect to become operator, or at such later date as the parties may agree.
Area 4 comprises four contiguous licence blocks in the southern part of the Maltese offshore adjacent to acreage in Libya. MOG has recently shot and interpreted an extensive long-offset 3D seismic survey over the central graben area of Area 4. This process has identified a number of plays and several prospects have been defined in each play type. It is now apparent that this part of offshore Malta is geologically analogous to the Libyan Sirte Basin, containing analogues to proven producing fields in Libya in addition to those offshore Tunisia. Specifically MOG has identified a portfolio of prospects in the Lower Eocene/Paleocence sequence. The new data has also for the first time allowed imaging of the deeper syn and pre-rift Cretaceous and Jurassic sequences, enabling several large leads to be defined at this stratigraphic level.
In addition, Genel Energy and MOG have signed an Area of Mutual Interest agreement for a minimum term of three years which covers cooperation in assessing and acquiring exploration and production assets in the offshore areas of Malta, Libya and Tunisia.
The Transaction, which is targeted for completion by the end of October 2012, is conditional on the receipt of approval from the Maltese Minister for Resources and Rural Affairs, together with a one year minimum extension of the first phase exploration period of the Area 4 licence.
Commenting on the transaction, Dr John Hurst Chief Operating Officer of Africa for Genel, said:
“We are delighted to have reached agreement to farm in to the Area 4 Block Offshore Malta, a licence with considerable exploration potential being geologically similar to known producing areas nearby in Libya and offshore Tunisia. It is consistent with our strategy of building a portfolio of high impact exploration assets within the Middle East and Africa.”
Press Release, August 23, 2012