Under the signed MOU, Oilexco will fund 100% of Premier's cost of drilling a well on the Palomino prospect in return for 31.25% of the P1048 license. Premier will retain an 18.75% interest in the license.
The well is planned for drilling in December 2005 using a rig already under contract to Oilexco. It will explore multiple targets defined by 3D seismic.
The arrangement is subject to the conclusion of a full agreement and UK Department of Trade and Industry approval.
Simon Lockett, Chief Executive of Premier, said:
'We are very pleased to have added a further well to our active exploration program at zero cost'.
A drilling program of approximately 12 wells is in place for 2005. Both wells completed so far this year have been successful; the first, a flow test on an appraisal well on the Tiof field in Mauritania and the second was a discovery and flow test from the Al Amir-1 exploration well in Egypt. An appraisal of the Al Amir discovery is planned for later this year. In India, the Lakkhi-1 well commenced in April 2005 and operations continue. Further wells are planned to be drilled later in 2005 and early in 2006 in Mauritania, Pakistan, Indonesia, Guinea Bissau, Gabon and Vietnam.
The current partners and interests in license P1048 are:
Pre farmout Post farmout Premier Oil Exploration Ltd (Operator) 50% 18.75% Talisman Energy Beta Ltd 30% 11.25% First Oil Expro Ltd 15% 15% Reach Exploration Ltd 5% 5% Oilexco North Sea Ltd - 50%*
* In addition to Premier's farmout, Talisman Energy Beta Ltd are farming out a further 18.75% interest to Oilexco on the same terms, giving Oilexco a 50% interest in the license.
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