Cove Energy Complete Farm-Out to TOTAL

Thursday, October 6, 2011
  • Cove will contribute 5%, Anadarko 20% and DGA 5% to the Farm Out Agreement
  • The Farm Out Agreements have now closed and equity transfer has been effected.
  • The 5 Offshore Blocks cover an area of 30,682 sq km (7.5 million acres) and are located over an extensive Kenya deepwater fairway from the Somalia border in the north to Tanzania in the south.

Cove Energy plc, the AIM quoted upstream oil and gas company focused on East Africa, through its wholly owned subsidiary, Cove Energy Kenya Limited ("Cove Kenya") together with its partners, Anadarko Kenya Company ("Anadarko"), a wholly owned subsidiary of Anadarko Petroleum Corporation and Dynamic Global Advisers Kenya Limited ("DGA") (together the "Farm Out Partners"), are pleased to announce that, following the receipt of the consent of the Government of Kenya, represented by the Minister of Energy, all necessary permissions and approvals have been granted to the farm out agreement whereby TOTAL E&P Kenya BV ("TOTAL"), a wholly owned company within the TOTAL S.A group (the "Farm Out Agreement") has agreed to acquire a 30% interest in five contiguous deepwater blocks, L5, L7, L11A, L11B and L12, offshore Kenya (the "5 Offshore Blocks").

As previously announced on 21 September 2011, Cove will contribute 5%, Anadarko 20% and DGA 5% to the Farm Out Agreement. In addition to the Farm Out Agreement. TOTAL have also agreed to purchase DGA's entire interest in the 5 Offshore Blocks. The Farm Out Agreements have now closed and equity transfer has been effected.

The 5 Offshore Blocks cover an area of 30,682 sq km (7.5 million acres) and are located over an extensive Kenya deepwater fairway from the Somalia border in the north to Tanzania in the south. There is a diversity of hydrocarbon play types within the 5 Offshore Blocks that have not yet been tested before in Kenya and which are similar to those that have been successfully explored by Cove and its partners in Rovuma Offshore Area 1, Mozambique, including Upper Cretaceous and Tertiary deepwater fan systems. The 3D seismic surveys over two areas in the 5 Offshore Blocks will be completed shortly with the first exploration well planned in 2012.

John Craven, CEO of Cove Energy plc, commented:

"We are delighted to have completed the farm-in agreement with TOTAL and we are encouraged by the swift response of the Kenyan authorities in approving this transaction.

"We are excited to be taking part in another high impact exploration programme offshore East Africa, this time in Kenya, where together with our L10A & L10B blocks we have built a major acreage portfolio. The participation of TOTAL is a further validation of the potential of our Kenyan acreage and is a reward for Cove's early entry into this emerging offshore province".

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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