OilVoice - Circle Oil Signs Farm-out Agreement on its Namibian Licence

Circle Oil Signs Farm-out Agreement on its Namibian Licence

Tuesday, September 09, 2008

Circle Oil plc, the AIM listed international oil and gas exploration and development company, has signed a farm-out agreement on its Ovambo Basin licence in Northern Namibia with Petroholland Ltd, a Dubai holding company, with interests in both the upstream and downstream oil and gas industry. The licence covers an area of over 70,000 square kilometres immediately to the south of the Angola Namibia border.

Under the terms of the agreement Petroholland will acquire a 70% undivided interest in the licence with Circle retaining a 20% interest and NAMCOR, the Namibian State oil company holding a 10% share.

In consideration for the 70% interest in the licence, Petroholland has agreed to pay Circle US$15 million in cash and cover all of the costs attributable to Circle’s 20% share of exploration and development expenditure through to production.

The Namibian Minister for Energy and Mines, The Honourable Erkki Nghimtina MP, has already approved the assignment of the 70% share in the licence to Petroholland and has agreed that Petroholland will become the operator of the licence. NAMCOR has elected not to exercise its pre-emption right under provisions of clause 12 of the current Joint Operating Agreement.

Petroholland has engaged the services of Halliburton consultants to provide the technical capability, personnel and resources to fulfil its obligations under the terms of the farm-out agreement and the Joint Operating Agreement.

David Hough, CEO of Circle, said:
“This is a good deal for Circle providing us with further cash for investment in our work programmes. It also provides us with a free carry on the Ovambo Basin licence, and any subsequent upside. We look forward to working with Petroholland with a common goal to achieve success in the licence.”

Petroholland

Petroholland is a private oil and gas company originated in The Netherlands, with subsidiaries in South America and Africa, and holding companies in Dubai and Bahrain for the purpose of equity funding into the industry.

Activities are: exploration of oil and gas, refining, marine transport and the trade of oil and gas derivatives. This portfolio includes holding a major contract in Bolivia for exploration for Natural Gas. Petroholland also has major relationships with State companies in Africa and South America for exploration for oil and gas and outsources contracts to major multi national engineering consulting companies to execute its workorders.

Petroholland’s investment into the oil and gas industry for the period 2008 - 2010 is budgeted at around 2-3 billion US Dollars and its strategy is to use the most modern technology for securing success and the highest return to its investors.