These farm-outs provide funding to cover the next two years of exploration and introduce an experienced and successful operator to this project in Mali.
Heritage Oil is recognized as one of the most successful independent oil companies operating in Africa. Heritage, as 50% owner and operator of Blocks 3A and 1 in Uganda has been instrumental in the discovery of a new hydrocarbon system in the Lake Albert Basin, which has tremendous hydrocarbon potential. The Albert Basin bears many similarities to the Gao Graben of Mali where Centric's Blocks 7 and 11 are located. The last eight wells drilled by Heritage and its partner Tullow in the Albert Basin have all been successes, with the Kingfisher-1 well testing at a cumulative rate of 13,893 bopd. In addition, Heritage has been very successful in the Republic of the Congo. Its initial exploration work lead to the discovery of the M'Boundi oilfield, one of the very largest onshore oilfields in sub-Saharan Africa.
Heritage has an outstanding technical and management team who will now be able to apply their understanding of African interior-rift basin petroleum systems to the exploration of the Gao Graben. These farm-outs to such an experienced company validate the exploration concept that led Centric Energy to acquire these two Blocks in Mali through its acquisition of Mali Oil Development SARL.
Terms of the Farm-Out
Under the terms of the farm-outs, wholly owned subsidiaries of Heritage will earn a 75% interest in Blocks 7 and 11 in return for funding all costs of the obligatory work programs for the next two years in both Blocks. The obligations include the acquisition of 2D seismic in both Blocks at a minimum cost of US$5 million, seismic and geological interpretation, and the drilling of one well to a depth of at least 2000 meters for a minimum cost of US$8 million. The actual seismic and drilling costs are expected to be greater than these minimum-spending obligations. Heritage will also take over the operatorship of the Blocks.
Alec Robinson, Centric Energy's President & CEO, says:
"This farm-out brings the expertise of a company that has been highly-successful in this type of geological province, into the exploration of Blocks 7 and 11 and, through this, into Mali. It will ensure the most rigorous and technically capable exploration of the Blocks. In line with our strategy, it will help Centric Energy to balance the risk profile of its asset portfolio while focusing funds and management time on other ventures and on the evaluation and acquisition of new opportunities. Centric Energy Corp. is proud to be working with Heritage on the exploration of Mali Blocks 7 and 11."
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