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Thursday, January 14, 2010
Sea Dragon Energy’s wholly owned subsidiary, Sea Dragon Energy (Kom Ombo) Ltd. has signed a Farm-out Agreement with Dana Gas Egypt Ltd. Under the agreement Sea Dragon will acquire a 50% participating interest in the Kom Ombo (Block-2) Concession in Upper Egypt.
The total consideration paid by Sea Dragon to Dana Gas was $45 million subject to working capital adjustments. This consideration is to be paid in full by April 30. Approximately $20 million shall be cost recoverable by Sea Dragon out of future production revenue. As owner of a 50% participating interest in the Kom Ombo (Block-2) Concession, Sea Dragon will be required to pay its 50% share of future expenditures and is entitled to receive a 50% share of all future production revenues and 50% of all cost recoveries as specified in the Concession Agreement. Under the terms of the Farmout Agreement, Sea Dragon and DGE will jointly operate the Kom Ombo (Block-2) Concession. The acquisition is subject to the consent and approval of relevant Egyptian authorities.
Dana Gas gained access to the Kom Ombo Concession when it acquired Canadian independent Centurion Energy International. Centurion Energy at the time of the acquisition was led by Said Arrata, the current CEO of Sea Dragon Energy.
The Kom Ombo (Block-2) Concession contains the Al-Baraka Development Lease, where Dana Gas just announced a new discovery with the drilling of the Al Baraka-4 well. The well encountered 50 ft of oil pay in the previously defined reservoirs and some 25 ft of oil pay in a new reservoir.
Future development plans for the Al-Baraka oil field include the drilling of some 30 development wells over the next several years. Horizontal drilling and specialized fracturing are the techniques being considered in order to maximize production rates and oil recovery.
Commenting on the acquisition of the Kom Ombo (Block-2) Concession, Said Arrata, Sea Dragon’s Chairman and CEO said, “This is a very significant event in the growth cycle of our Company. It marks our second success in aggressively acquiring discovered undeveloped resources with significant exploration upside. We are very excited about the development potential of the Al-Baraka Field. The Kom Ombo (Block-2) Concession is a very attractive and highly prospective concession block for which we have high expectations. We are looking forward to jointly operating this property with DGE and are optimistic that we can achieve significant production levels over the short term through the application of new technologies.”
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