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Monday, October 21, 2013
Pancontinental Oil & Gas and Tullow Kudu Ltd. have completed the legal process that has Tullow farming into license EL 0037 offshore Namibia. Tullow has now been assigned a 65% interest in EL 0037. Pancontinental will retain a free-carried 30% interest out of its previous 95% interest.
Pursuant to the farm-out agreement, Tullow has taken over as operator from Pancontinental and will commence extensive programs of 2D seismic and 3D seismic and, subject to identifying a drillable prospect, fully carry Pancontinental through an exploration well. Paragon Oil & Gas’ 5% free-carried interest will be included in the Tullow farm-in expenditure.
Pancontinental estimates that Tullow’s total farm-in expenditure may be up to $130 million (100% basis).
Under the terms of the farm-out agreement, Tullow will pay 65% of back costs and 100% of forward costs during the farm-in period and complete the 2D and 3D seismic surveys outlined above. Should the 2D and 3D seismic not deliver a suitable drilling target, Tullow shall be entitled to withdraw from its commitment to drill the well outlined above by giving written notice to Pancontinental not later than 16 months after the date of the completion of the acquisition of the 3D seismic or 13 months prior to the expiry of the first renewal exploration period, whichever is the earlier. Commencement of the acquisition phase of the 3D seismic is required by the end of December 2014, and may possibly occur as soon as early-2014 depending on seismic vessel availability and other factors. Should Tullow withdraw after fulfilling its 2D and 3D seismic commitments it must re-assign its 65% interest back to Pancontinental, at no cost to Pancontinental.
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