In exchange for an option to acquire 50% of the Company's interest in the Tselfat permit, Sphere will fund the costs to acquire a 110 sq. km. 3D seismic survey to be shot over the Haricha field and northern portion of the Brou Draa field in early 2008 and will also fund the cost of additional geological studies. It is estimated the 3D survey and the studies will cost approximately U.S. $4.5 million over the next year. Upon its exercise of the option, Sphere will (i) fund the drilling and testing of an exploratory well; and (ii) replace the Company's bank guarantee deposited with the Moroccan government. The exploratory well will be drilled to a depth of at least 2,000 meters (6,500 feet) to test a previously undrilled sub thrust prospect. The Company will remain as operator of the permit through this exploration phase which extends to May 2009.
Sphere Petroleum QSC is a rapidly expanding oil and gas exploration company with a focus on West and North Africa and the Middle East. The company was originally formed as a subsidiary of Sphere Investments Ltd. (SPH), an Australian company quoted on the Australian Stock Exchange. It was recently spun out and established as an independent, private company in Qatar.
The Tselfat exploration permit covers 900 square kilometers (222,000 acres) and is located onshore in northern Morocco. It was awarded to the Company in May 2006 for a period of 8 years. The permit contains three previously produced but now abandoned oil and gas fields: Haricha, Tselfat and a portion of the Bou Draa Field, all of which were discovered in the 1950's or earlier. The Company believes the 3D seismic survey and the geological studies will provide additional data for the potential redevelopment of the Haricha field and will define the deeper prospectivity on the permit.
The national oil company of Morocco, Office National des Hydrocarbures et des Mines ("ONHYM"), is carried for 25% of the costs during the exploration phase of the permit. Provided Sphere exercises the option, the Company (37.5%), Sphere (37.5%) and ONHYM (25%) will each pay their share of costs in the development phase. Under the Moroccan Hydrocarbon Code, royalties are 10% on oil and 5% on gas, there is a 10-year holiday on corporate tax, and operations are exempted from VAT and custom duties.
TransAtlantic is engaged in the exploration, development and production of crude oil and natural gas and has interests in the U.S., Morocco, Turkey, Romania and the U.K. North Sea.
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