Serica Energy plc has announced that Genel Energy plc will be joining Serica’s wholly owned subsidiary Serica Sidi Moussa B.V. (“Serica”) and its partners, San Leon Offshore Morocco B.V. and Longreach Oil and Gas Ventures Limited, in the exploration of the set of permits which comprise the Sidi Moussa Offshore area (“Sidi Moussa”) in Morocco.
Serica, San Leon and Longreach (together the “Sidi Moussa Participants”) hold a combined 75% equity interest in Sidi Moussa with the balancing 25% interest held by the Office National des Hydrocarbures et des Mines (“ONHYM”), the Moroccan State oil company. In accordance with the terms of the permits the costs relating to ONHYM’s 25% interest are carried in full by the Sidi Moussa Participants during the exploration and appraisal stage.
Under the transaction, Genel will acquire a 60% equity interest in Sidi Moussa, pro rata from each of the Sidi Moussa Participants according to its equity interest. In return Genel will pay a contribution to past costs of US$1.3 million (US$433,000 net to Serica) and pay for the drilling of the commitment well required in the First Extension Period (including the full costs relating to the ONHYM carried interest), up to a cap of US$50 million. As a result of the farm-out, Serica will hold an ongoing interest of 5% in the Sidi Moussa permits with San Leon and Longreach holding 8.5% and 1.5% respectively.
Over the past two and a half years Serica and its partners have been carrying out extensive geological and geophysical analyses of the sub surface in Sidi Moussa. Having identified several prospective exploration targets a farm-out process was initiated to attract a partner with the requisite financial and technical capability to drill in the relatively deep waters of Sidi Moussa. The transaction with Genel is the successful result of that process.
The partnership has already informed the Moroccan authorities of their intention to proceed into the First Extension Period, which entails the drilling of a commitment well.
Tony Craven Walker, Serica’s Chairman and Interim Chief Executive said:
“The work undertaken by Serica and our partners in Sidi Moussa has demonstrated the considerable exploration opportunity of the Sidi Moussa permits. We are therefore very pleased that a company of Genel’s financial and technical capability has decided to join us through a transaction which enables Serica to participate in near term exploration drilling with the potential for very large upside. The farm-out of our interest in Sidi Moussa follows similar transactions in Namibia and the UK and demonstrates the underlying quality of our international exploration portfolio. “
Press Release, August 23, 2012