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Wednesday, May 7, 2014
Jacka Resources’ wholly owned subsidiary, Jacka Resources Somaliland Ltd. (JRSL) in Somaliland has signed a second farm-out agreement with Sterling Energy for the Odewayne Block PSC. Sterling will acquire the Jacka subsidiary’s 15% participating interest in the PSC for a total cash consideration of $12 million, and results in Jacka exiting Somaliland.
Approval for the transaction has been received from the government of Somaliland and the company expects completion under the Second Sterling Agreement within days.
Under the terms of the Second Sterling Agreement Sterling will acquire an additional 15% interest in the PSC from JRSL, effective on completion. Sterling will pay $2.4 million on signature of the Second Sterling Agreement and $9.6 million on completion and Jacka will cancel the $12 million future conditional payments due under the Original Sterling Transaction.
In November 2013 Jacka announced JRSL’s farm out of a 15% participating interest in the Odewayne block to Sterling (the Original Sterling Transaction). That transaction closed in January 2014 after receiving government approval.
Although this transaction results in JRSL’s departure from the PSC, Jacka retains an option to acquire a 5% participating interest arising from its original farm in agreement with Petrosoma Ltd. The option can be exercised on the earlier of the proposal of a second well in the PSC or the parties entering into the Fifth Period of the PSC.
The PSC is currently in the third period (expiring November 2014) with an outstanding minimum work obligation of 500 km of 2D seismic. The minimum work obligation during the fourth period of the PSC (expiring May 2016) is for 1,000 km of 2D seismic and one exploration well. Operations in Somaliland have been delayed by security concerns and Genel Energy, the operator on behalf of the JV partners, is working with the Ministry of Energy and Minerals to resume operations as soon as practicable.
Jacka’s Managing Director, Bob Cassie commented: “Jacka’s challenging past nine months have been well documented elsewhere. As a result of these circumstances it has been imperative that the Company looks to its asset base to provide it with the necessary funding for working capital and to maintain progress on its other assets. With the funds from this transaction, the recent placement and the current fully underwritten entitlements issue to raise a combined $3.9 million, Jacka will emerge with a strong balance sheet and can now look forward to progressing the Aje Field (OML113 offshore Nigeria) through a final investment decision (expected in mid-2014) and into development; as well as further appraisal of the Hammamet West oilfield, offshore Tunisia; and exploration on OML113, in the Bargou permit surrounding the Hammamet West field, and the Ruhuhu licence, onshore Tanzania.
“Jacka remains enthusiastic about Somaliland and considers the option to acquire another 5% interest in the future as providing the company and its shareholders with an opportunity to re-enter the project as work advances. Jacka would like to take this opportunity to thank the joint venture partners and the Somaliland government for their assistance over the years and in approving this key transaction for the company. We wish them and the people of Somaliland success with the future exploration program.”
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