Afren Energy (Ghana) Limited, a wholly owned subsidiary of Afren, has agreed to a farm-down transaction with Mitsui E&P Ghana Keta Limited, a subsidiary of Mitsui & Co., Ltd in respect of the Keta Block, located offshore in the Eastern Basin, Ghana, subject to Government approvals.
Mitsui will earn a 20% participating interest in the Petroleum Agreement governing the Keta Block in return for a significant contribution to the forthcoming Cuda -1X exploration well. The Cuda well is being drilled with the Transocean Deepwater Discovery drillship and the well was spudded on Nov. 16, 2008.
The Cuda-1X will be drilled in a water depth of 5,577 feet, as a vertical well to evaluate the Cuda prospect. Planned Total Vertical Depth of the well is 15,750 feet subsea. The primary target for the well is the Upper Cretaceous, deepwater sandstones in a combined structural and stratigraphic trap. There are no plans to perform drill stem testing on the well. The well is anticipated to take approximately 50 days.
Potential resources for the Cuda prospect are estimated by Afren to be between 325 and 642 million barrels of oil. The play type to be targeted is similar to the Jubilee and Odum discoveries, currently being developed by Tullow and Kosmos in the west of the country. There are also a number of additional identified prospects, which are currently in the process of being assessed by the partners on the Keta Block.
Following completion of this transaction the Keta Block interests will be Afren with 68%, Mitsui with 20%, GNPC with 10% and Gulf Atlantic Energy with 2%.
In Angola, the Company has decided not to complete the acquisition of a 15% working interest in Block 16 from Devon Energy. The net financial exposure to Afren had significantly increased from the time of announcing the transaction in November 2007. Given current market conditions, and the Company's focus on production, near term development and material high impact exploration in Ghana, it was felt that this was the most prudent approach.
"We are very pleased to have agreed this successful farm-down to Mitsui," said Osman Shahenshah, chief executive of Afren. "Following the Jubilee discoveries, Ghana is an emerging and significant West African hydrocarbon province. We are delighted with this first step in Afren's growing relationship with Mitsui, the major Japanese conglomerate with a long term involvement in the oil and gas sector. Moreover, Afren's shareholders are offered significant exposure to high impact oil and gas exploration with a significant promote. We are extremely excited about the upcoming Cuda well and believe the Block contains a number of exciting prospects."
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