ShaMaran Petroleum Corp. has signed a final binding agreement with the Kurdistan Regional Government ("KRG") to relinquish to the KRG the 60 percent working interests currently held in each of the Arbat and Pulkhana Production Sharing Contracts ("PSC").
Under the terms of the agreement the PSC for each of the Pulkhana and Arbat blocks is terminated whereby ShaMaran's interests in both PSCs are relinquished. The Company has agreed to a payment to the KRG of consideration valued at $25 million after which the Company will be relieved of all further obligations under the PSCs.
This asset realignment will relieve the Company from the remaining work program obligations of Pulkhana and Arbat block, and allow ShaMaran to focus its activities and resources on the Atrush and Taza Blocks, which the Company considers to be their most prospective blocks.
The Company, as part of General Exploration Partners Inc ("GEP"), and its partner, Marathon Petroleum KDV B.V., are currently carrying out an appraisal program in the Atrush block in which a major discovery was announced in April 2011. This program consists of a 3D seismic survey which is underway and expected to be completed in the first quarter. The partnership is also planning to drill an appraisal well in the second quarter of 2012 followed by the installation of an early production system. ShaMaran, through its wholly-owned subsidiary, ShaMaran Ventures B.V., has a 33.5 percent stake in GEP, which is a party to the Atrush Block Production Sharing Contract and currently holds an 80 percent interest. Marathon Petroleum KDV B.V., a wholly-owned subsidiary of Marathon Oil Corporation, holds a 20 percent interest in the block.
The Company in coordination with Oil Search Iraq Limited ("OSIL") is also planning to drill its first well in the Taza Block (formerly Block K42) in the second quarter of 2012. ShaMaran holds a 20 percent working interest in the PSC. OSIL is the operator with a 60 percent working interest in the PSC. The Kurdistan Regional Government of Iraq ("KRG") holds a 20 percent working interest in the PSC with costs carried by ShaMaran and OSIL.
ShaMaran President and CEO, Pradeep Kabra, commented, "This agreement allows ShaMaran to move forward in Kurdistan on its highly prospective remaining projects by removing the high financial obligations of the Pulkhana and Arbat blocks which were not as prospective as anticipated. We still consider Kurdistan to be one of the most attractive regions in the world to explore and develop oil projects and will continue to look for growth opportunities in the country."
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