Mediterranean Oil & Gas Plc has announced that it has signed the two key contracts with Genel Energy Plc (“Genel”) that enable Genel’s acquisition of a 75% working interest in MOG’s wholly owned subsidiary, Phoenicia Energy Company Limited (“PECL”).
This follows the Government of Malta granting a one year extension to January 2014 of the first exploration phase of the Production Sharing Contract (“PSC”) for Malta Offshore Area 4.
Share Sale Agreement
The Share Sale Agreement will result in Genel acquiring 75% of the issued share capital of PECL on completion of the transaction (the “Transaction”) for the following consideration:
· US$10 million cash payment;
· 100% carry on the first exploration well, and a 100% carry on the second exploration well up to US$30 million gross expenditure;
· At MOG’s option, should the costs of the second well exceed US$30 million, Genel will provide a financing arrangement to fund MOG’s 25% share of any additional expenditure, at an interest rate equivalent to 3 Month Libor plus 400 bps.
· MOG will remain operator via an Operations Service Agreement with PECL until completion of the first exploration well, at which time Genel can elect to become the operator, or at such later date as the parties may agree.
The Shareholders’ Agreement, also entered into today, governs the operation of PECL in relation to its execution of the PSC and the rights and obligations of the shareholders.
Completion of the Transaction is expected to occur in early 2013.
Dr. Bill Higgs, Chief Executive of Mediterranean Oil and Gas, commented:“The signing of these two key contracts cements the relationship between MOG and Genel for the exploration of Area 4 in Malta and delivers on the Company’s key objectives regarding its Malta licence. Plans for the start of drilling of the first exploration well are progressing such that we will be able to test the first Eocene Prospect with the drill bit by the end of 2013. We intend to start awarding drilling related contracts early in the New Year, including contracting of a drilling rig for the operations. We are excited to be leading this new phase of exploration activity offshore Malta.”
Press Release, December 24, 2012