Pura Vida Energy is leaving Morocco, and is taking the drilling equipment with it, to use it for an exploration campaign there.
In a statement on Monday, the energy company said it was set to complete a settlement agreement with a subsidiary of Freeport-McMoRan Oil & Gas, PXP Morocco B.V. (PXP), in relation to the second well obligation under the farmin agreement it had in Morocco.
To remind, Freeport-McMoRan, with Pura Vida as partner, in 2015 failed to find oil at the MZ-1 exploration well, in the Mazagan permit offshore Morocco and were to drill a second well afterwards, which never happened.
Pura Vida said Monday that under the terms of the settlement, it has or will receive a cash settlement sum of $7 million, inclusive of a deposit of US$1.5 million received by Pura Vida in September 2016, with the balance payable by PXP; and a substantial amount (2,376 metric tons) of drilling equipment left over from drilling operations in Morocco.
This equipment was acquired by PXP for the second well and a relief well in Morocco, and includes two well heads, casings, tubulars and associated drilling equipment. This equipment is sufficient to drill two wells each to a depth of approximately 3,000m.
Pura Vida said it has together with PXP elected not to continue into the next optional phase the Mazagan permit and has withdrawn from the permit. A
Pura Vida is focusing on activities in the Nkembe block offshore Gabon, in particular, the commerzialisation of the Loba discovery as well as the near term exploration potential around Loba.
To this end, Pura Vida said, the drilling equipment has been shipped to Gabon where it will be used for drilling operations in the Nkembe block – subject to securing a partner to fund those activities and receiving the necessary regulatory approvals.
Pura Vida, estimates that the cost to acquire the casing and tubulars (excluding the well heads) potentially required for two wells in Gabon to be over US$3 million. Being able to use some of the drilling equipment received from PXP for the planned three well program offshore Gabon, together with the commitment under the conditional term sheet with the rig contractor announced on 19 January 2017, reduces the funding to be secured from a project partner for the Nkembe block to approximately $17 million.
Managing Director, Damon Neaves, said: “I would like to express our gratitude to the regulator, ONYHM, the Government of the Kingdom of Morocco as well as our joint venture partner, PXP, for their efforts in relation to the Mazagan permit culminating in the drilling of a deep water well last year which tested multiple exploration plays. We have made the decision to exit Mazagan in order to focus our strategy on near term, lower risk opportunities such as the commercialization of the Loba discovery in Gabon.”