Petroleum Africa
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Thursday, September 25, 2014
With the drilling of the TAO-1 well on Morocco’s Tarfaya Offshore Block, Tangiers Petroleum has decided to exit the block. The company said that after an internal strategic review, and as part of the finalization of its obligations, it has undertaken to exit the Tarfaya Offshore Block either by assigning its 25% interest to Galp Energia, Tangiers’ partner and the operator of the block, for consideration of $3.4 million; or by withdrawal when the permit expires in February 2015.
Under an agreement with Galp, if the exit has not been completed within six months (or 12 months at the discretion of Galp), Tangiers’ Moroccan subsidiary, DVM International, will be liable to Galp for a payment of $3.4 million. Given that the permit expires in February 2015, and that the intention of both Galp and DVM is for DVM to assign the permit, the board is confident that the contingent liability in DVM has a low chance of realization. Assignment or withdrawal is subject to the normal approvals process by the Moroccan government and Onhym, the state petroleum entity.
Tangiers has also agreed a payment to Galp of $3.4 million, in stock or cash, if the market capitalization of Tangiers exceeds $50 million within seven years of the agreement. This payment will also be required if Tangiers delists for any reason, such as due to a change of control.
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