Australia-listed oil and gas explorer Pura Vida has struck a $230 million deal to sell a stake in its Mazagan exploration permit, offshore Morocco, the company revealed Thursday.
The buyer – Plains Exploration and Production (PXP) – will take a 52 percent interest in the project, and provide funds needed to test the license's potential. Pura Vida will receive a cash payment of $15 million on completion of the transaction and PXP will fund the entire cost of the exploration operations.
The new partners will start by drilling the Toubkal target, which has been interpreted as a structure which could contain 1.5 billion barrels of oil. Pura Vida said that the well is likely to be drilled in 2014, in line with its existing forecast of rig availability and the drilling programs being planned by the operators of neighboring blocks.
Commenting on the joint venture's drilling program, Pura Vida's Managing Director Damon Neaves said: "Amongst the Mazagan joint venture and our nearest neighbors, we expect at least five exploration wells in the locality of Morocco to be drilled in 2014. This represents an unprecedented investment in exploration offshore Morocco which will target significant resources and has the potential to alter the energy landscape in Morocco."
"Based on drilling plans by Genel (1 well), Cairn (2 wells) and Kosmos (2 wells) on adjacent permits in 2013/14, it is likely that Pura Vida and PXP will also drill, using the same rig, in this time-frame," Argonaut Securities analyst David Wall said in a research note released Thursday.
"The cash back, multiple wells with large expenditure capital, as well as near term drilling, makes this arguably the best farm-out deal executed by an ASX-listed exploration company," Wall added.
The farm-out includes a carry on two wells and additional exploration activity. The additional activity includes deepening of wells and more 3D seismic. After the farm-out is completed, the partners in the Mazagan exploration permit are: PXP (52%), National Oil Company (25%) and Pura Vida (23%).
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