TIDMMOG TIDMDPL
RNS Number : 0523J
Mediterranean Oil & Gas Plc
24 June 2011
24 June, 2011
Mediterranean Oil & Gas Plc
("the Company", "MOG")
Offshore Malta Area 4 PSC (Blocks 4, 5, 6, 7)
Farm Out of 75% Interest
The Board of Mediterranean Oil & Gas Plc (AIM: MOG), the
central Mediterranean focused producer, developer and explorer of
oil and gas assets, is pleased to announce that Phoenicia Energy
Company Limited ("PEL"), a wholly owned subsidiary of MOG, has
entered into an Execution Agreement ("Execution Agreement") with
Dominion Petroleum Limited ("Dominion") to farm-out a 75% operated
working interest in the production sharing contract for Blocks 4,
5, 6 and 7 of Area 4 Offshore Malta ("Maltese PSC"), pursuant to a
draft farm-in agreement (the "Maltese Acquisition"). Completion of
the Maltese Acquisition is conditional upon (i) receipt of required
Maltese government approvals and (ii) completion of the placing of
shares by Dominion, announced on 24 June, 2011 ("Dominion
Placing").
Under the Execution Agreement, Dominion will pay a deposit of
US$225,000 to PEL, which is non-refundable in the event that the
Dominion Placing does not complete, or Dominion is otherwise unable
to enter into the farm-in agreement. Should the Maltese government
approvals not be received, the deposit is refundable in its
entirety.
The Maltese PSC is situated to the north of Libya, covering an
area of 5,715 km(2) in Maltese waters. It includes both the
Cretaceous rift potential of the Melita-Median Graben and the
confirmed Eocene carbonate play of North Africa. A competent
person's report on Area 4, completed by RPS Energy and prepared for
MOG in March 2006, identified a number of prospects within the
area. Of particular interest is the Tarxien prospect, a lower
Eocene carbonate build up. Using Libyan oil field analogues, RPS
estimated the prospect to have a gross recoverable un-risked P50
prospective oil resource of 115mmbbl with an 18% chance of
success.
Under the Maltese PSC, MOG currently holds a 90% operated
working interest through its subsidiary PEL, with Leni Gas &
Oil Investments Limited holding the remaining 10% of working
interest. Following the completion of the Maltese Acquisition and
the subsequent farm-in agreement, Dominion will hold a 75% operated
working interest in the Maltese PSC. Under the terms of the farm-in
agreement, Dominion will meet certain exploration costs up to a cap
of US$1,260,000, on behalf of MOG in relation to its remaining 15%
working interest. Dominion will also compensate MOG for a total
amount of US$900,000 in certain historic costs, through the
US$225,000 deposit mentioned above and a closing sum of US$675,000
under the farm-in agreement.
The work obligations of the current period of the Maltese PSC
comprise the acquisition of 1,000km(2) of 3D seismic data and the
drilling of one exploration well. The results of the seismic survey
will enable the JV partners to define and evaluate the Tarxien
prospect and other identified opportunities within Area 4, prior to
any drilling decision. The long-offset 3D will also allow for a
clearer analysis of the pre-tertiary rift-fill below the Eocene
carbonates and potential Cretaceous targets.
The first exploration period runs until January 2013 and there
is a minimum spend requirement of US$5 million. The Company
anticipates that the 3D seismic survey will cost between
approximately US$8 million and US$10 million gross to undertake,
which will satisfy the minimum spend requirement.
Michael Bonte Friedheim, the Company's CEO, stated:
"Following agreement with the Government of Malta to extend the
exploration phase for all blocks of Area 4, for 18 months, we are
very pleased to have concluded the terms for a farm out with
Dominion.
While this remains conditional, the farm out agreement allows us
to be practically free-carried for the completion of a 1,000 sq km
long-offset 3D seismic survey, as well as receive a significant
reimbursement of back costs. Dominion has extensive experience in
frontier exploration activities and we are glad to have them as a
partner.
We are hopeful that the seismic survey will identify further
prospects in the area and make the drilling of an exploration well
attractive. "
Background
On 18(th) July 2008 MOG entered into a PSC with the Maltese
Government following a very encouraging geological and geophysical
assessment of the PSC Area undertaken by the Company and its
consultants during the 36 month Exploration Study Agreement (ESA)
phase.
The PSC granted MOG the exclusive right to explore for and
exploit oil and gas in a 5,700 sq km area which extends south from
Maltese waters to the agreed and internationally recognised border
with Libya. The PSC has a term of 30 years and is divided into
exploration and production periods. The 6 year exploration period
is divided into 3 stages with an initial 3 year stage in which the
Contractor is obliged to undertake a 2,500 metre well. Following
the current stage the Contractor can extend the exploration phase
for two additional exploration periods of 18 months each by
undertaking a further one well commitment for each extension. The
first exploration period was originally due to expire on 18(th)
July 2011.
On 1(st) June 2011, the Company announced an agreement with the
Government of Malta to extend the first exploration phase of the
Production Sharing Contract ("PSC") for offshore Malta Area 4
(Blocks 4, 5, 6, 7), by 18 months to January 18, 2013.
Malta is surrounded by large proven petroleum systems, in the
offshore parts of Libya, Tunisia and Sicily. The studies performed
by the Company established that the geology within the PSC Area has
potential for petroleum systems related to the Tunisian and Libyan
hydrocarbon plays and fields. These systems provide encouraging
analogues for Area 4. Source, reservoir and seal rocks, similar in
age and character to those developed in both Tunisia and Libya, are
present in the PSC Area.
The PSC Area is covered by various vintages of 2D seismic data
and by a 3D survey over the western part of the block 7. Since
2007, the Company has acquired 1,012 sq km of new 2D seismic in the
area, processed the newly acquired seismic, reprocessed in time and
depth the existing 3D dataset and re-interpreted the entire 2D and
3D seismic data package available in the area.
Four prospects and five leads on the PSC Area have been
confirmed and delineated. The new assessment of prospective
resources and potential hydrocarbon volumes in place undertaken by
the Company in 2010 substantially confirm the previous assessment
undertaken for the Company by RPS. The total un-risked hydrocarbon
potential of the PSC Area is estimated to be around 5 billion
barrels of oil in place with resultant total 'most likely case'
un-risked prospective recoverable oil resources of about 1,500
MMbbls. The three most mature prospects are located in Block 7
along the ramp setting of the Melita - Medina Graben close to the
Libya pelagic basin.
QUALIFIED PERSON
Sergio Morandi (a director of the Company) holds a first class
honours degree in geology from La Sapienza University (Rome) and
has over thirty years E & P experience spent in oil and gas
exploration and operations management and seismic data acquisition,
processing and interpretation with ENI, Coparex, ELF, Enterprise
Oil, Shell Italia E&P and Shell International E&P. Mr.
Morandi's last position held was as International Geophysical and
Business Advisor with Shell International E&P at EPTS - Centre
of Expertise in The Netherlands. His earlier roles include Head of
Exploration for Shell Italia E&P and as Head of Exploration and
Chief Geophysicist for Enterprise Oil Italiana. Mr. Morandi has
been a lecturer in Applied Seismology at the Basilicata University
in Italy, is a board member of Associazione Mineraria Italiana, is
a current member of the European Association of Geoscientists and
Engineers, registered member number 563 of the Lazio Geologists'
Order and is a registered geological adviser to the Rome and
Viterbo Tribunals in Italy. He has compiled, read and approved the
technical disclosure in this regulatory announcement. The technical
disclosure in this announcement complies with the SPE/WPC
standard.
ENQUIRIES:
Mediterranean Oil & Gas Plc
www.medoilgas.com
Michael Bonte-Friedheim, CEO Tel: +44 780 2217028
Sergio Morandi, COO Tel: +39 06 99589179
Chris Kelsall, Finance Director Tel: +44 789 1040 658
WH Ireland Limited
James Joyce Tel: +44 (0) 207 220 1666
Panmure Gordon
Katherine Roe Tel: +44 (0) 207 459 5744
Pelham Bell Pottinger
Archie Berens Tel: +44 (0) 207 861 3112
/ (0)7802 442486
Glossary
Sqkm Square kilometers
Scm Standard cubic meter
Bcf Billion cubic feet of gas
Mcf Thousand cubic feet of gas
MMcf Million cubic feet of gas
MMscm Million standard cubic meters
TD m Total Depth in meters
MD Measured Depth
TVD True Vertical Depth
2P (P1 & P2) Reserves Proven plus probable reserves as
defined in the SPE/WPC Standard
Prospective oil/gas resources Has the meaning ascribed by the
SPE/WPC Standard
SPE/WPC Society of Petroleum Engineers/World Petroleum
Congress
This information is provided by RNS
The company news service from the London Stock Exchange
END
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