OilVoice - Cygam Energy Signs Farm-in Agreement for the Bazma Permit, Tunisia

Cygam Energy Signs Farm-in Agreement for the Bazma Permit, Tunisia

Thursday, October 22, 2009

Cygam Energy Signs Farm-in Agreement for the Bazma Permit, Tunisia

Cygam Energy Inc. announces that its wholly owned subsidiary, Rigo Oil Company Limited (“Rigo”), has signed an Option and Farm-in Agreement (“the Agreement”) with a large U.S. independent oil and natural gas company (“the U.S. Company”) for the Bazma permit, located onshore in central Tunisia and encompassing an area of 1,616 km2 (approximately 400,000 acres).

Under the terms of the Agreement, the U.S. Company has agreed to reprocess existing 2D seismic data and acquire new 2D seismic data on the Permit. The U.S. Company will also have the option to conduct a 3D seismic survey and the option of earning an interest by drilling a deep well on the Permit. If, during the term of the Agreement, Cygam decides to drill a well to test the shallower Triassic Tagi formation, the U.S. Company has also the option to participate in the costs of drilling such a well.

Rigo currently holds a 100% interest in all formations in the Bazma permit.

Under pre-existing agreements and upon earning by two current partners, [Canoel International Energy Ltd. (“Canoel”) and Timgad Energy (“Timgad”), Rigo will have a 79% working interest (inclusive of a 12.7% carried interest) in the Triassic Tagi formation.

The interests currently being held in trust for Canoel and Timgad will be allocated to those companies after they fulfil their participation commitment to drill a well into the Frida structure to test the Triassic Tagi formation and their interest below the Triassic Tagi formation will be proportionally adjusted if the U.S. Company exercises its option to drill the deep well.

Drilling operations at the Frida structure to test the Triassic Tagi formation are planned for mid-2010, subject to rig availability. This well is scheduled to be drilled to a total depth of approximately 2,500 metres at a location approximately 6 km from the Tarfa-1 producing well and in close proximity (5 km) to an existing pipeline.

Cygam is delighted to have signed an Agreement with the U.S. Company to conduct additional seismic work and possibly drill a deep well on the Permit. The U.S. Company will bring additional significant in-depth experience in the exploration and development of similar plays to the Bazma permit, which will be very beneficial to the evaluation and potential exploitation of any newly identified reservoir.

Cygam is a Calgary based exploration company with producing exploration properties in Canada and extensive international exploration permits. The main focus of the Corporation is the acquisition, exploration and development of international oil and gas permits, primarily in Italy, Tunisia and the Mediterranean Basin. Cygam currently holds various interests in six exploratory permits in Italy and four exploratory permits in Tunisia encompassing approximately over 3.5 million gross acres (approximately 1.8 million net acres before pending farm-outs).