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Sunday, November 5, 2017
Tullow Oil has submitted a notice to the government of Mauritania, for both itself and Sterling Energy, that it will not be entering the third renewal period for Block C-10 offshore the country. Tullow, who is operator of Block C-10, will exit the block as of November 29.
The PSC, awarded in 2011, is in the second phase of the exploration period and covers Block C-10, offshore Mauritania, comprising an area of approximately 10,725sqkm. Phase 2 of the PSC will expire on November 30 and has a minimum work obligation of one exploration well.
On entry in early 2015, Tullow had matured a drill ready Neocomian carbonate prospect in a water depth of approximately 100meters. The JV originally anticipated that an exploration well to test this prospect would be drilled in 2017 but this will not be satisfied prior the expiration of Phase 3.
Tullow, on behalf of the JV, has been negotiating with the Mauritanian government to secure a one-year extension through a new 3D survey. To date, the government has stated that this work obligation proposal does not warrant an extension to the second term.
Subsequent, Sterling has determined that while the acreage is prospective, there is insufficient commercial justification in entering the third phase, which has a minimum work obligation of two wells.
Given that the joint venture will not fulfil the minimum work obligation, the gross penalty payment due to the government will be $7.5 million.
Eskil Jersing, Sterling’s CEO commented, “Our entry into the C-10 block, was prefaced on extensive subsurface work demonstrating potential for both untested inboard Neocomian carbonate and outboard Cenomanian to Albian plays, the latter proven by Kosmos. However, subsequent technical and economic modelling has not matured a viable hub scale opportunity on block.
“We entered the acreage in early 2015, at low cost and capital exposure together with exit options that we felt were of the appropriate risk profile for the block potential. It is unfortunate that we have not been unable to define commercially viable hub scale opportunities on the block in this exploration period.
“As a result, our relatively low-cost exit of $1.125million net SEML is in-line with our consistently disciplined approach to exploration asset execution and capital allocation.
“We would like to thank Tullow and Société Mauritanienne des Hydrocarbures et de PatrimoineMinier – SMHPM, for their partnership and support on the block.”
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