Africa Oil Corp has signed two production sharing contracts (‘PSCs’) with the Republic of Equatorial Guinea for offshore Blocks EG-18 and EG-31. These PSCs are subject to ratification by the country’s government. Africa Oil will hold eighty per cent (80%) operated interests in each block with the balance to be held by GEPetrol, the national oil company of Equatorial Guinea. GEPetrol has the option of acquiring an additional fifteen percent (15%) participating interest in each block. Both blocks are covered by 3D seismic data and the total minimum work commitment for both blocks in the initial exploration periods is a combined total of USD 7 million, with no drilling commitment.
In Block EG-31 the Company has identified several gas-prone prospects in shallow water depths of less than 80 meters and close to existing infrastructure, including the offshore Alba gas field and the onshore Punta Europa Liquefied Natural Gas (“LNG”) Terminal. Potential future discoveries could present low-cost, low-risk gas development opportunities targeting international LNG markets.
In Block EG-18 the Company has identified a potentially large and highly prospective basin floor fan prospect of Cretaceous age, that is similar to those within the Company’s exploration portfolio in Namibia and South Africa.
Africa Oil President and CEO Keith Hill commented:
‘I am pleased to announce our entry into Equatorial Guinea with two highly-prospective offshore blocks. While we continue our primary focus on cash flowing production assets in order to underpin sustainable shareholder distributions, we still look to add exploration blocks with attractive fiscal terms in advantaged areas where discoveries can be quickly appraised and brought on stream. Block 31 offers the potential for low-risk gas prospects that are in a proven petroleum province with infrastructure and ullage for significant additional volumes of gas. In Block 18 we see a large turbidite fan that is reminiscent of some of our large discoveries in Namibia and South Africa. These blocks offer high-impact value upside for our shareholders at relatively low cost, and we look forward to continued collaboration with the government of Equatorial Guinea to explore and develop its natural resources’