Junior explorer Chariot Oil & Gas has farmed out a 35-percent interest in Block C19 offshore Mauritania, West Africa, to independent oil and gas firm Cairn Energy, the companies announced Thursday.
Chariot will retain operatorship of the block, with a 55-percent equity stake. Société Mauritanienne des Hydrocarbures (SMH) holds the remaining 10 percent of the block.
As part of the deal, Cairn has agreed to pay approximately $26 million toward the cost of 3D seismic data already acquired by Chariot on the block as well as other back costs.
Block C19 covers an area of 4,680 square miles and is located some 19 miles off the coast of Mauritania in water depths of up to 6,900 feet. According to Chariot, it has exceeded its work commitments on the license with the acquisition of a 1,350-square mile 3D seismic program.
Fast track data was received in mid-March and final pre-stack depth migration (PSDM) volumes are due to be received in November this year. This data will be fully interpreted and analyzed with the objective of identifying a drillable prospect during the first quarter of 2014 and, subject to the results of this, drilling planning and the evaluation of partnering options is due to begin soon afterwards.
Chariot CEO Larry Bottomley commented in a company statement:
"We are pleased to have agreed a partnership on C19 in Mauritania with Cairn, whose focus on exploration-led growth is aligned with Chariot's objective of creating transformational value for stakeholders through the discovery of material accumulations of hydrocarbons."
In a separate statement Cairn Chief Executive Simon Thomson said:
"The opportunity in Mauritania presents an attractive new country entry, building on our existing Atlantic Margin portfolio in Senegal and Morocco. By developing an increased strategic presence in the under-explored and highly prospective new plays in this region, we can generate both operational and geological synergies and fully apply our proven frontier exploration skills."
Analysts at London-based investment bank finnCap commented that they viewed the transaction "as a natural extension of Cairn's strategy in West Africa" while also leaving Chariot "with a material operated state in the license and on track to achieve zero cost exploration".
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