Maurel & Prom Farms-In to Mandawa PSA Onshore Tanzania
Dominion Petroleum Limited announced that Maurel & Prom has reached an agreement with Dominion to farm-in to the Mandawa PSA, onshore Tanzania. The agreement is subject to certain conditions precedent, including the approval of the Government of the United Republic of Tanzania.
The Mandawa Production Sharing Agreement ( PSA ) grants Dominion's subsidiary, Dominion Oil and
Gas Limited (the Contractor or the Operator ) exclusive rights to explore for petroleum in the Mandawa License Area which occupies 6,811 km2 onshore in Tanzania. The PSA was signed in May 2005.
The Initial Exploration Period lasts for four years during which time the Contractor must acquire 300 km of seismic and drill two exploration wells. Dominion has already fulfilled the seismic and minimum expenditure commitments. The PSA also allows for optional First and Second Extension Periods. The First Extension Period lasts for a further four years, during which time the Contractor must acquire a further 150 km of seismic, and drill two more exploration wells. The Second Extension Period lasts for three years during which the Contractor must drill a single further exploration well.
Under the terms of the farm-in agreement, Maurel & Prom will assume 50% of the interest in the Mandawa PSA. In return, it will contribute to Dominion's past exploration costs and it will also pay its equity share of forward exploration costs including those of the two commitment wells. The first of these Mihambia-1 is due to be drilled in the last quarter of 2008.
On September 8, 2008, Dominion announced that it signed a contract with Caroil, a subsidiary of Maurel & Prom, to supply a rig to drill Mihambia-1. Dominion will continue to be the Operator under the PSA during the exploration phase.
Mike Garland, Chief Executive Officer of Dominion, said, "Dominion is pleased to have concluded this farm-in agreement . Whilst a number of companies have been interested in farming-in to the Mandawa PSA, we believe that the offer from Maurel & Prom provides the best overall deal to Dominion going forwards. They are one of the most successful and largest exploration companies active in Africa ( including in Tanzania as a result of the Mukuranga discovery made in 2007) , and furthermore bring clear access to drilling services via their
ownership of Caroil. We look forward to a fruitful partnership with them."
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