Dragon Oil has signed a farm-in agreement with Cooper Energy to establish a 55% participating interest in and, in any development phase, assume operatorship of the Bargou exploration permit, offshore Tunisia.
Dragon Oil will receive a 55% participating interest in the Bargou permit by paying 75% of the cost to drill the Hammamet West-3 well. Under the agreement, Dragon oil has placed a cost cap of US $26.6 million, and if the cost exceeds this amount, then the costs will be shared among the joint venture partners pro rata to their participating interest.
The well plan consists of a pilot hole followed by a horizontal section to intersect the fractures within the Abiod formation thereby increasing the flow potential of the reservoir. This well is expected to be drilled in 2012. The farm-in is subject to approvals by the Government of Tunisia and the joint venture partners.
Following completion of the transaction, the Bargou Joint Venture will consist of Dragon Oil (55%), Cooper Energy (30%) and Jacka Resources. If Hammamet West is developed, Dragon Oil will assume operatorship of the block. The permit resides in the Gulf of Hammamet in the Mediterranean Sea, spanning an area of 1.1 million acres (4,616 square kilometers) in water depths ranging between 164 to 328 feet (50 to 100 meters).
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