OilVoice - Vangold Awarded Block 3A in Kenya

Vangold Awarded Block 3A in Kenya

Tuesday, October 30, 2007

Vangold Resources Ltd. has signed a production sharing o (PSC) for Block 3A in the Anza Graben in the Eastern Province of Kenya, covering 12,192.12 sq. kms.

At a signing ceremony in Nairobi, on October 16, 2007 the Honourable Minister of Energy of the Republic of Kenya, Kiraitu Murungi, and the President and CEO of Vangold, Dal Brynelsen executed the PSC on Block 3A. Mr. Brynelsen said; “Vangold has chosen Block 3A on technical merit based on a study conducted by Vangold’s technical team over the last year. This study found five prospects and one lead on Block 3A. The next phase will be to reprocess part of the seismic data with new Canadian technology to establish the detailed geometry of the prospects and to come up with the appropriate in-fill seismic programme.

Under the terms of the PSC, in the Initial Contract Period of three years, in addition to a signing bonus of US$75,000 which has been paid, Vangold will expend a minimum of US$3,000,000 to conduct a technical study and plan to acquire 1000-line kilometer 2D seismic and 50 sq km 3D seismic. Provided these results are positive, during the third year of the Initial Exploration Period, Vangold will drill one exploratory well to a minimum total vertical depth of 3,000 meters with a minimum expenditure of US$6,000,000. A finder’s fee of 200,000 common shares of Vangold will be paid subject to regulatory approval.

In 2006, Chinese National Oil Company (CNOOC Limited) announced that it’s subsidiary CNOOC Africa Limited signed PSCs for six blocks located in three basins in Kenya including the Anza Graben (Block 9) adjacent and to the north of Vangold’s Block 3A. In total, the CNOOC acquired a total area of 115,343 sq kms. On October 4, 2007, Lundin Kenya B.V., a wholly owned subsidiary of Lundin Petroleum signed a PSC for Block 10A which covers an area on 14,748 sq kms also in the Anza basin and adjacent to CNOOC’s Block 9. A news release dated October 5, 2007 stated: “Past exploration efforts dating back to the late 1980’s have proven the existence of excellent quality, oilprone source rocks, good quality sandstone reservoirs, and a multitude of structural traps which remain undrilled”. Vangold intends to share technical resources and data with CNOOC and Lundin Petroleum.

Prospectivity of Block 3A acreage include Tertiary, Cretaceous and Jurassic petroleum plays which are equivalent to the plays found in Lamu, Anza and Mochesa basins. The three basins of Lamu, Anza and Mochesa converge in Block 3 acreage. Good reservoir development has been confirmed in Bahati-1, Anza-1 and Endela-1 exploratory wells drilled in Block 3A. Potential lacustrine and marine hydrocarbons source rocks of Upper Cretaceous age have been confirmed from these exploratory wells data in Anza Graben. Hydrocarbons trapping mechanism includes tilted fault blocks, faulted anticlinal closures and stratigrahic traps.