Canadian Overseas Petroleum Limited (COPL) has signed a farm-in agreement with Faroe Petroleum plc for Blocks 206/5a and 206/10a, License P.1161, which include the Freya discovery and the Fulla exploration prospect.
Under the terms of the agreement, COPL will pay 60% of the costs to drill an exploration well in the Fulla prospect to earn a 50% equity interest in both blocks. The well is expected to be drilled in 2011.
Blocks 206/5a and 206/10a are located approximately 10 kilometers northeast of the Clair field which has recently been producing between 30,000 to 49,000 barrels of oil per day. Both Fulla and Freya appear to have similar seismic and geological characteristics to the Clair field.
The farm-in represents partial satisfaction of the first Release Condition for the Company's recently closed $130 million offering of subscription receipts. The completion to the farm-in is dependent upon the total satisfaction of the first Release Condition of escrowed funds, certain conditions precedent and regulatory approvals.
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