Petroleum Africa
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Wednesday, June 22, 2016
Vegas Oil & Gas has moved into East Africa as part of a JV with Motor Oil Hellas (MOH). The JV, MV Upstream Tanzania, reached an agreement with Otto Energy to acquire a 25% participating interest in Tanzania’s onshore Kilosa-Kilombero License.
Under the terms of the farm down agreement, MV Upstream shall pay to Otto the sum of $2.3 million (inclusive of applicable taxes) for a 25% participating interest in the license as reimbursement of historical costs incurred by Otto. In addition to paying its 25% participating interest share of well costs, MV Upstream shall carry Otto’s remaining 25% working interest through the drilling of the Kito prospect up to an amount of $2 million. Costs over and above this capped amount shall be payable by Otto in accordance with its remaining 25% participating interest. Well costs are currently estimated at around $10 million.
Also under the agreement, if the drilling of the Kito prospect results in a discovery, MV Upstream shall carry Otto’s remaining 25% working interest through the drilling of an appraisal well up to an amount of $1 million.
The transaction is conditional upon customary Tanzanian regulatory and joint venture approvals prior to completion.
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