Petroleum Africa
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Thursday, December 19, 2013
In Morocco Fastnet Oil & Gas’ wholly owned subsidiary, Pathfinder Hydrocarbon Ventures, reached an agreement with SK Innovation to farm out a 12.5% paying interest in four exploration licenses comprising the Foum Assaka offshore Contract Area.
Under the terms of the agreement, SK Innovation will acquire a 12.5% interest in the Foum Assaka Block and shall pay 100% of Pathfinder’s 12.5% share of the cost of the first exploration well subject to a maximum gross well cost of $100 million. In the event that the second well, following the initial exploration well, is not an appraisal well but a further exploration well then, it will be SK Innovation’s election to participate, SK Innovation will again pay 100% of Pathfinder’s 12.5% share of the cost of the second well subject to a maximum gross well cost of $100 million.
If the gross costs in either of the two wells are less than $100 million then, provided Fastnet and SK Innovation agree to re-drill the same prospect, SK Innovation shall carry Fastnet until such time as the cumulative gross cost for both wells reach $100 million.
Also under the agreement, SK Innovation shall pay to Fastnet the sum of $3,220,900, which represents a 25% share of costs incurred by Pathfinder up until October 1, 2013. In addition, SK Innovation shall pay 25% of actual costs incurred by Pathfinder from October 1, 2013 to January 1, 2014 and any pre-drill costs directly attributable to the FA-1 well being the first well drilled on the Eagle prospect. SK Innovation shall also pay 12.5% of Pathfinder’s costs in relation to its participating interest during the period from January 1, 2014 until the issue of a Joint Ministerial Order approving the assignment of the 12.5% participating interest from Pathfinder to SK Innovation.
Completion of the farm out is subject to the customary closing conditions.
Carol Law, executive director of Fastnet said: “The farm out of half of our interest in the Foum Assaka Block provides Fastnet with a very low cost opportunity to participate in the drilling of a high profile, potentially high reward well in what we view as one of the industry’s hottest new exploration areas. This transaction validates Fastnet’s strategic decision to conduct a separate competitive farm out process for its equity interest in this highly regarded exploration block in the Agadir Basin, as exemplified by BP’s farm-in to the Kosmos equity. Fastnet has secured excellent commercial terms and has ensured that the carried equity interest has running room in the event of a follow up appraisal or exploration well being drilled.”
Paul Griffiths, managing director of Fastnet added: “The farm-out agreement significantly strengthens Fastnet’s balance sheet and ensures that our exciting offshore and onshore drilling program in Morocco in H1 2014 can be optimally executed in a manner consistent with the company’s stated strategy of returning value to shareholders in the event of early drilling success.”
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