Petroleum Africa
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Tuesday, January 18, 2011
Africa Oil Corp., together with Range Resources Ltd. and Lion Energy Corp., have entered into amended agreements with the government of Puntland for the PSAs covering the Dharoor Valley Exploration Area and the Nugaal Valley Exploration Area. Under the amended PSAs the First Exploration Agreement has been extended for a further 12 months, extending to January 2012.
Africa Oil said that under the amended PSAs it is obligated to spud a minimum of one exploratory well in the Dharoor Valley Exploration Area by July 27. A second exploratory well is required to be spud in the Nugaal Valley Exploration Area or, at the option of Africa Oil, in the Dharoor Valley Exploration Area, by September 27.
Africa Oil also reported that in addition to the amended PSA that the proposed farm-out to Red Emperor of a 20% interest in each of the PSAs has been approved by the government. Under the farm-out, Red Emperor is committed to pay a disproportionate share of the costs related to Africa Oil's drilling commitments in the First Exploration Period.
Keith Hill, President and CEO of Africa Oil commented on these developments as follows: "We look forward to the upcoming wells in the rift basins of Puntland which we believe could hold similar potential to the geologically related basins in Yemen which contain more than six billion barrels of discovered reserves. We appreciate the cooperation and efforts from the government in granting this extension and are in advanced negotiations with a drilling contractor to meet these obligations. We also would like to welcome our new partner Red Emperor to the joint venture."
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