Victoria Oil & Gas has agreed to a 12-month option to acquire the entire share capital of Falcon Petroleum Limited, a Cypriot company with substantial exploration prospects in Ethiopia and Mali.
Falcon has a Production Sharing Agreement ("PSA") for 90% of Blocks Ab1, Ab4 and Ab7 of the Blue Nile (Abay) Basin in Ethiopia covering around 26,000 square kilometers and a PSA for 50% of the 20,000 square kilometer Block 17 in the Nara Trough in the west of Mali. Rashed al Suwaidi, a Director of VOG, has a 25% indirect interest in Falcon.
VOG has claimed first mover advantage as both of these projects are in relatively unexplored, but highly prospective regions of Africa. Block Ab1 in Ethiopia has oil seeps, confirming an active petroleum system. Further subsurface exploration, including potentially a passive seismic survey, will greatly enhance the understanding of the projects' potential and identify target locations for exploration drilling.
VOG has paid an option fee of approximately $400,000 in cash, which will be treated as a loan if the option is not exercised within 12 months. The option exercise price will be determined by an independent technical expert's report, which has been commissioned by VOG and cannot exceed $12.5 million. It will be payable by a combination of cash and the issue of new VOG shares.
VOG Chairman, Kevin Foo, said today "We are delighted to get the opportunity to acquire these substantial exploration properties and are very encouraged by the initial reports we have received. This deal will further our strategy of diversifying our asset portfolio outside the Former Soviet Union and the option gives us a low-cost entry into two exciting and underexplored new regions."
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