Petroleum Africa
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Wednesday, April 19, 2017
African Petroleum signed a non-binding heads of terms and a binding exclusivity agreement with an unnamed, well funded, listed oil and gas company with a strong track record in offshore deep-water drilling. Both agreements provide a framework for the incoming third party to secure a 70% operated interest in the company’s SOSP PSC in Senegal and the A1 and A4 licenses in Gambia.
The exclusivity agreement grants the incoming third party an initial eight-week period of exclusivity over the company’s SOSP PSC in Senegal and the A1 and A4 licenses in Gambia. This period of exclusivity may be further extended under certain conditions. During the period of exclusivity African Petroleum and the incoming party will work together to finalize negotiations with the respective governments in order to amend the work commitment in Senegal and to enter the next phase of the licenses in The Gambia, complete due diligence, and agree and execute farm-in documentation.
The Heads of Terms sets out the broad commercial terms under which the incoming party intends to, subject to certain conditions, farm-in to the three licenses. The terms propose that the incoming party will pay up to $8.5 million to the company, fund 100% of at least two deep water offshore wells at a gross cost of up to $35 million per well, fund 100% of a 3D seismic acquisition, fund 100% of pre-stack depth migration, processing/reprocessing, and potentially fund 100% and 85% respectively of a further two wells at a gross cost of up to $35 million per well.
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