Origin, on behalf of its wholly owned subsidiary Origin Energy Kenya advised that it has reached agreement with a subsidiary of Apache, to divest a 50% undivided interest in a Production Sharing Contract (PSC) for petroleum exploration and production, pertaining to Block L8 located in the Lamu Basin, offshore Republic of Kenya.
Under the terms of the agreement Origin will, on completion, be reimbursed historical costs of US $13.2 million and Apache will become operator of the PSC. In addition, Apache will meet a component of Origin's costs of an exploration well to be drilled in Block L8, on the Mbawa structure.
The agreement is subject to certain joint venture rights and to approvals from the other joint venture parties in Block L8, namely Pancontinental Oil & Gas NL (ASX: PCL) and its wholly owned subsidiary Afrex Limited. Approvals are also required from the Kenyan Ministry of Energy. It is expected that these conditions will be satisfied and completion will take place by the end of June.
Commenting on this agreement, Origin's Executive General Manager, Geoscience & Exploration New Ventures, Dr Rob Willink said, "Origin is pleased to have secured this agreement with Apache which, subject to joint venture and government approvals, will see the joint venture go forward and assume a commitment to drill. We also welcome Apache, as incoming operator, bringing to the joint venture its specialist drilling expertise."
Offshore East Africa at large has become an industry focus for exploration as a result of recent deepwater gas discoveries offshore Tanzania and Mozambique. Block L8 comprises 5,123 square kilometres with attractive exploration opportunities that include several large objectives. Prospectivity of the block centers on the Mbawa structure, a large but complexly faulted anticline mapped on 3D seismic data with potential for both oil and gas at inferred Cretaceous and Jurassic reservoir levels.
Subject to joint venture and government approvals interest holders in PSC Block L8 will become:
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