SOCO International reported that its Production Sharing Contract ("PSC") over the Nganzi Block, onshore the Democratic Republic of Congo (Kinshasa) ("DRC"), has received a Presidential Decree thus passing the final regulatory hurdle before becoming effective 12 April 2008. The Company subsidiary, SOCO Exploration and Production DRC Sprl ("SOCO E&P-DRC"), is the operator with an 85% participating interest in the Block. La Congolaise des Hydrocarbures ("Cohydro"), the state owned oil company, holds the remaining 15% interest.
The Nganzi Block, in which there had been little previous activity before the Company signed the PSC in July 2006, comprises an area of approximately 800 square kilometres on the eastern flank of the prolific coastal basin. The Company acquired a reconnaissance aeromagnetic and gravity survey across the Block to define the basin geometry and structural trends and subsequently conducted a geochemical survey to evaluate the potential of the structural leads identified by the aero survey. The results of both surveys will be used to help lay out a 2D seismic grid and acquisition is expected to commence in the summer of 2008.
In addition, SOCO E&P–DRC has entered into a new PSC with the Government of the DRC, Dominion Petroleum Limited and Cohydro, wherein the parties have acquired exclusive rights for hydrocarbon exploration on Block 5, located in the southern Albertine Graben in eastern DRC adjacent to the DRC/Uganda border. The Block has an area of 7,105 square kilometres, including part of Lake Edward. There were several significant oil discoveries made in 2006 and 2007 in the central Albertine Graben.
The SOCO subsidiary holds a 38.25% participating interest in the PSC with Dominion, as operator, holding a 46.75% interest through its subsidiary Dominion Congo Limited and Cohydro holding the remaining 15% interest. The PSC is subject to and becomes effective upon ratification by the President of the DRC.
The first phase of the PSC has a 5-year span, during which SOCO and Dominion will carry out geological and geophysical work, acquire at least 300km of seismic data and drill two exploration wells. The PSC is renewable for two further five-year terms.
Ed Story, president and chief executive of SOCO, commented, "Confirmation of our first PSC in the Democratic Republic of Congo is a very important first step to commencing a full-scale exploration programme in the country. Moreover, we are pleased to have the possibility to expand our portfolio in this country where we see significant unexplored potential. We view our collaboration with Dominion Petroleum as an effective way of extending our asset base eastward in the country given their extensive involvement in the Albertine Graben."
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