"PA Resources is excited by this new opportunity to participate in the exploration of Republic of Congo's offshore sector. Together with our existing Congolese portfolio, this acquisition demonstrates PA Resources' ambition to grow and expand. The expected production from the Azurite field, together with our existing production, carry us closer to achieving our production goal of 50,000 barrels per day, says Ulrik Jansson, President and CEO of PA Resources AB.
The asset is located in the prolific Lower Congo Basin adjacent to Angola's deepwater Block 14 and the Haute Mer Permit in the Republic of Congo. The Mer Profond Sud Permit includes the Azurite Marine Field, which was discovered in 2005. The field is appraised by two wells, both of which were sidetracked. All wells have encountered oil and the well "AZRM-2ST1" was tested at a rate of 7,893 barrels of oil per day and 4.63 million standard cubic feet gas per day. Recoverable reserves are estimated at 75 million barrels (gross) of which 26 million barrels net to PA Resources.
The Field Development Plan was approved by the Congolese Ministry of State, Ministry in charge of Hydrocarbons, in June 2007 and contemplates development via a spread-moored Floating-Drilling-Producing-Storage-Offloading (FDPSO) vessel with sub-sea wells. Expected production start is in the second quarter 2009 with an expected peak production of 40,000 barrels of oil per day (gross) of which 14,000 barrels of oil per day net to PA Resources.
The Mer Profond Sud Permit also includes a large exploration block covering in excess of 3,500 square kilometers with 19 un-drilled prospects and identified leads. Four of these have been matured to drill-ready status, with additional resources associated with a large exploration portfolio.
The purchase price amounts to US$110 million plus an additional carry of approximately US$23 million for two exploration wells. Additionally, the parties have agreed on a performance related price adjustment to be settled one year after the start of production. The financial consolidation into the PA Resources Group will take place during the first quarter 2008. The acquisition is subject to normal regulatory approvals by the Congolese Ministry of State, Ministry in charge of Hydrocarbons. PetroAdvisor has acted as advisor for PA Resources in the acquisition process.
Murphy West Africa Ltd, part of Murphy Oil, retains a 50% share in the permit as well as in the Azurite field and will remain operator. Partners on the block include PA Resources AB (35% participating interest) and SNPC (15% participating interest).
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