Petroleum Africa
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Monday, April 14, 2014
Cygam Energy updated its activities on the TT field located on the Bir Ben Tartar (BBT) Production Concession, and the execution of a Sale and Purchase Agreement relating to the Sud Tozeur Permit in Tunisia. Through a wholly-owned subsidiary, Cygam holds a 14% working interest in the BBT Concession and a 100% interest in the Sud Tozeur exploration permit.
Gross production from the TT Field increased to an average of 2,498 during March 2014 due to production from new wells TT15, TT28, and TT18 which were completed during Q1. The partners have initiated a secondary recovery scheme through the conversion of the TT12 well to water injection which commenced in April. Work continues on installing an early production facility and gathering system which will result in existing wells being flow line connected to a central tank battery and processing facility. It is expected that this substantial infrastructure upgrade will be completed during 2014.
A total of five vertical development wells have been successfully drilled to date. Of these, four have been completed and three are on production. One further vertical well is planned to be drilled in the current six-well development program.
Cygam’s wholly owned subsidiary Rigo Oil Co. has entered into a Sale and Purchase Agreement with YNG Exploration, whereby YNG will acquire Rigo’s 100% interest and all associated commitments in the onshore Sud Tozeur exploration permit. Cygam said the transaction is subject to a number of terms and conditions being satisfied including approval from the government to transfer the permit to YNG; extension of the permit into the First Renewal Period of three years; carryover and potential increase of the current 3D seismic acquisition commitment into the First Renewal Period; payment of a $5.0 million Compensatory Payment in lieu of the undrilled commitment well with this payment being deferred and paid in installments on terms to be agreed with the Tunisian government.
Subject to these terms and conditions, as compensation to Rigo, YNG will pay a total of $2. million towards Rigo’s $5 million Compensatory Payment obligation. It is expected that YNG will pay the first and final $1 million installments of the Compensatory Payment to the Tunisian authorities on Rigo’s behalf. Rigo will retain responsibility for the remaining $3 million of the Compensatory Payment installments which, for Rigo, are anticipated to commence in 2015.
Cygam’s CEO David Taylor commented: “We are very pleased to have entered into the Sud Tozeur transaction with YNG who are enthusiastic about the exploration potential of the permit. Whilst we still have to secure all necessary government approvals, the anticipated outcome is a win-win for all stakeholders. The future exploration activity in the permit will benefit Tunisia whilst, at the same time, Rigo’s future work program commitments are eliminated and Cygam’s exposure to substantial penalties materially reduced.”
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