Africa Oil - Maersk Oil farmout deal completed

Africa Oil has completed its farm out deal to Maersk oil and gas where it is reported to have received a total of $427 million which is accounted for as follows.

•  $344million as reimbursement of past costs incurred by Africa Oil prior to the agreed March 31, 2015 effective date of the farmout.

• US$83 million representing Maersk’s share of costs incurred between the effective date and December 31, 2015

•   a carry reimbursement of US$15MM of exploration expenditures. 

An additional US$75 million development carry may be available to Africa Oil upon confirmation of existing resourced, which is expected to take place in Q1 of 2016. Upon Final Investment Decision (FID), Maersk will be obliged to carry Africa Oil for an additional amount of up to US$405 million depending on meeting certain thresholds of resource growth and timing of first oil. 

The resulting interests in each of Africa Oil’s Kenyan blocks are as follows:

Kenya Block 10BB	Africa Oil – 25%	Maersk – 25%	Tullow – 50%*
Kenya Block 13T	Africa Oil – 25%	Maersk – 25%	Tullow – 50%*
Kenya Block 10BA	Africa Oil – 25%	Maersk – 25%	Tullow – 50%*
Kenya Block 12A	Africa Oil – 20%	Tullow – 65%*	Marathon – 15%
Kenya Block 9	Africa Oil – 50%*	Marathon – 50%

           *denotes operator.

The farmout of 50% of Africa Oils interests in the Rift Basin and Soth Omo blocks remain subject to approval from the Ethiopian government, which is expected in the near future. 

At completion the portion of the Maersk farmout , the respective interests in each of Africa Oils Ethiopian blocks will be as follows:

Ethiopia Rift Basin	Africa Oil – 25%*	Maersk – 25%	Marathon – 50%
Ethiopia South Omo	Africa Oil – 15%	Maersk – 15%	Tullow – 50%*	Marathon – 20%

*denotes operator.

The CEO for Africa Oil, Keith Hill, remarked, “We are very pleased to have completed the Kenyan portion of our farmout to Maersk.  We feel Maersk will be an excellent partner in terms of technical and financial strength and experience critical to moving the development project forward.  This transaction puts Africa Oil in the enviable position of not requiring any additional equity financing prior to first oil and will allow us to weather the current difficult oil price environment should it continue into 2016.” 

-Source: globe news wire