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Oil Search Dilutes Interests in Yemen with Sale of Block 3 Stake to Total

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Australia-listed Oil Search revealed Monday that it has completed the sale of its 40 percent interest in Block 3 (Gardan), onshore Yemen, to French major Total for $44 million. As part of the deal, Total will assume operatorship of the block.

Oil Search disclosed that based on the current book value, an after tax profit from the sale will be included in its 2012 full year results.

Commenting on the deal, Oil Search's Managing Director Peter Botten said, "The completion of the sale of Oil Search’s interest in Block 3, Yemen is in line with our strategy to optimize our international acreage portfolio in the Middle East and North Africa, with a focus on licenses with material upside. Drilling is currently underway on a large prospect in Kurdistan, with encouraging preliminary indications, and a high potential well in Tunisia is due to commence drilling in early 2013."

With the sale of its Block 3 interest, Oil Search's remaining asset in Yemen is its 34 percent interest and operatorship of Block 7 (Al Barqa), also onshore Yemen, which contains the Al Meashar oil field discovered in 2010.

"The company is planning to acquire a 2D seismic program over prospective areas in [Block 7], subject to a stable and safe operating environment," Oil Search said in its disclosure.

Block 7 has been in force majeure since mid-2011 due to the "Arab Spring" uprising. Oil Search's most recent well drilled on the block, Al Meashar-1, was in March 2010. The well – at that time – flowed oil, gas and drilling fluids at an unstable rate of 200 barrels of oil per day and 100 barrels of drilling fluid per day.

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