Pancontinental Oil & Gas and its wholly owned subsidiary Afrex Limited together with partner FAR has received approval from the Kenyan Ministry of Energy and Petroleum for the farm-out of the onshore portion of Kenyan exploration area Block L6 in the Lamu Basin. Block L6 is partly onshore and partly offshore.
Under the terms of the farm-in with Milio E&P Limited and Milio International (“Milio”), Pancontinental will be fully funded through the drilling and testing of a high impact onshore exploration well in Block L6 expected to spud in H1 2015.
Pancontinental will also be fully funded through the acquisition, processing and interpretation of a regional onshore 1,000 kilometre 2D seismic survey. This is expected to confirm a number of prospects in onshore L6 as drill targets. This seismic program is expected to commence in April 2014.
Pancontinental retains a 16% interest in the onshore part of Block L6 and also preserves its 40% interest in the highly prospective offshore part of Block L6 which operator FAR has estimated to contain substantial prospective resources. FAR is also currently in discussions with parties to farm-in to drill an offshore well in Block L6.
Block L6 is well situated in relation to Kenyan coastal communities and infrastructure.
An onshore oil or gas development has the potential to contribute significantly to Kenya’s growing near-term energy needs.
Two of the main Prospects covered by 3D seismic offshore L6 are the Kifaru and Kifaru West Miocene Reef prospects, which share similar characteristics to the Sunbird Prospect currently being drilled by Pancontinental and its joint venture partners in offshore Kenya area L10A.
Barry Rushworth, CEO and Director of Pancontinental commented:
“We are very pleased that the Kenyan Ministry of Energy and Petroleum has approved the farm-out agreement announced on 4 February 2014. Pancontinental retains a healthy 16% free-carried interest onshore and additionally has the benefit of retaining its 40% interest offshore where we are also seeking a farminee for drilling. This farm-in deal secures funding for evaluating the significant potential of the onshore part of Block L6 and to help unlock the potential of the wider Lamu basin in which Pancontinental has a very large acreage position of some 20,000 square kilometres gross.
“The offshore area already has several Prospects covered by 3D seismic and ready for drilling including the large Kifaru and Kifaru West Miocene Reef Prospects. A number of other reefs have also been tentatively identified on 2D seismic.”
Press Release, February 17, 2014