Africa Oil Corp. announced that it has completed the Kenyan portion of the previously announced (July 23, 2012) farmout agreement with Marathon Oil Corporation ("Marathon Oil") whereby Marathon Oil acquired an interest in two of Africa Oil's Kenyan exploration blocks.
Under the terms of the farmout agreement, Marathon Oil acquired a 50 percent interest in Block 9 and a 15 percent interest in Block 12A, both in Kenya. Africa Oil will maintain operatorship in Block 9, but Marathon Oil has the right to assume operatorship if a commercial discovery is made. The resulting interest in the Kenyan exploration blocks are as follows:
Net Working Interests are subject to back in rights or carried working interests, if any, of the respective governments or national oil companies of the host governments.
In consideration for the assignment of these interests, Marathon Oil paid Africa Oil an entry payment of $32 million which includes reimbursement for prior expenditures, and has agreed to fund Africa Oil's working interest share of future joint venture expenditures on these blocks to a maximum of $25 million, anticipated to be spent over the next three years.
Keith Hill, Africa Oil's President and CEO, stated, "We are very pleased to welcome Marathon Oil as a partner with their stature and long history of success in the oil and gas business. We look forward to working together to expand on the success we have had in our East Africa exploration program to date. The consideration to be received from Marathon Oil will allow us to both accelerate the exploration in the blocks that Marathon Oil is farming into as well as provide additional funding to the Company for the accelerated exploration program on the Tertiary rift trend being executed in partnership with Tullow Oil. East Africa is rapidly becoming the most prospective oil and gas province in the world and the large, strategic land portfolio we hold ensures we will be at the center of industry activity."
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