African Petroleum has signed an agreement with an undisclosed oil and gas company that specializes in offshore deepwater drilling.
Under the agreement, the third-party will acquire 70% operated interest in African Petroleum’s SOSP production sharing contract (PSC) in Senegal and the A1 and A4 licenses in Gambia.
“This is a significant development for the company with a well-funded, credible partner with strong deepwater drilling experience,” says African Petroleum CEO Jens Pace.
“Whilst final farm-in agreements are subject to completion and the successful outcome of negotiations with the governments in Senegal and Gambia, we are confident that the proposed partner’s reputation, strong balance sheet and appetite to explore the potential of these exciting licences with the drill-bit, will greatly increase our ability to conclude the discussions with an outcome that benefits all parties.”
The agreement will provide an initial eight-week period of exclusivity to the third-party over SOSP PSC in Senegal and the licenses can be extended under specific conditions.
“This is a significant development for the company with a well-funded, credible partner with strong deepwater drilling experience.”
During this period, African Petroleum and an undisclosed party will finalize negotiations with respective governments to amend the work commitment in Senegal and to enter the next phase of licenses in Gambia.
They will also complete due diligence and execute a farm-in agreement.
Under the agreement, the party needs to pay up to $8.5m to African Petroleum, fund 100% of at least two deepwater offshore wells at a gross cost of up to $35m for each well, and the complete 3D seismic acquisition and pre-stack depth migration processing / reprocessing.
The agreement also requires the party to potentially fund 100% and 85% respectively of additional two wells at a gross cost of up to $35m per well.