Pura Vida Energy has reached a conditional agreement with an offshore drilling contractor which will fund a three-well drilling program in the Nkembe block, offshore Gabon.
The term sheet envisions the drilling contractor providing a jack-up rig and fund the costs of the rig for the three-well program anticipated to start in the second half of 2017.
The driller will also cover the mobilization costs and operating day rate of the rig, in exchange for a royalty out of production from any fields discovered during the drilling campaign that are brought into production.
The drilling operations, which will include an appraisal of the Loba oil field and a planned production test, are expected to last for three to four months. The costs to be funded by the rig contractor are approximately $20 million.
Pura Vida has started discussions with potential partners to secure the remaining funding required and meetings with the regulator concerning the approvals are being scheduled.
The value of the royalty payable to the rig contractor under the term sheet varies depending on the size and production rates of the relevant field(s) discovered during the 2017 drilling campaign, the company said.
Managing Director, Damon Neaves, said: “The proposed 2017 drilling campaign which includes three wells, including the potential for a production test of Loba to confirm a commercial flow rate to underpin development, represents an exciting opportunity that has the potential to transform Pura Vida from an explorer to a producer in the near term. Our plans to commercialize Loba and test the shallow water exploration potential of the Nkembe block are at the forefront of Pura Vida’s strategy and we are very pleased to have reached this conditional agreement to provide a rig and partial funding for those activities.
“Our focus now turns to formalizing the agreement and satisfying the conditions, including regulatory approvals and securing the remaining funding required. Our goal is to put the company in a unique position with three offshore wells this year to test various targets and, subject to production test results, advance the commercialization of Loba.”