Following the Company's announcement of the farm-out agreement with Cairn Energy Plc ("Cairn") on 28 August 2012, San Leon is pleased to announce that all parties have now received full Moroccan Authorities approval of the assignment of interest in the Foum Draa farm-out agreement..
Cairn has now assumed operatorship of the Foum Draa block, offshore Morocco ("Foum Draa" or "Block") and plans to drill an exploration well targeting a Lower Cretaceous objective in Q4 2013.
Cairn has acquired a net 50% operated equity interest in Foum Draa, pro rata from each of San Leon, Serica Energy plc ("Serica") and Longreach Oil and Gas Ventures Limited ("Longreach") (together the "Partners"). In return, Cairn will now pay its equity interest share of past costs, being US$1.5 million (US$850,000 net to San Leon) and pay the first US$60 million towards the drilling of the commitment exploration well.
San Leon Energy now holds a net operated interest of 14.17%, Serica holds 8.33% and Longreach holds 2.5% in the Foum Draa Block. ONHYM, the National Bureau of Petroleum and Mines will continue to hold 25%.
Executive Chairman, Oisin Fanning commented:
"We would like to thank the Moroccan Authorities for their approval of this transaction which now clears the way for the drilling of our first exploration well offshore Morocco. Depending on rig availability the current target is to drill the well this year. This Block contains mapped prospects and the farm-out agreement reduces our financial exposure but keeps our interest at a level which still offers attractive upside for our shareholders."
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