Dominion is pleased to announce that Dominion Oil and Gas Limited ("Dominion OGL"), a 100% owned Tanzanian subsidiary of the Company, has together with its partner Les Etablissements Maurel et Prom ("Maurel & Prom"), commenced drilling the Mihambia-1 exploration well using the Caroil-6 rig. The Mihambia-1 well is being drilled in the central part of the Mandawa PSA area and has potential for both oil and gas reserves in the Middle to Lower Jurassic reservoir targets. The well is planned to be drilled vertically to a depth of between 2300m and 2800m and is anticipated to take up to 45 days to reach total depth. Drilling had been postponed from the last quarter of 2008 due to delayed availability of the rig, which had been operating elsewhere within Tanzania.
Mihambia-1 is the first commitment well under the Mandawa PSA, which Dominion OGL entered into in May 2005. On September 11, 2008 Dominion announced that Maurel & Prom had agreed to farm-in to the Mandawa PSA to acquire an interest of 50% (the "Farm-In"). As announced, Maurel & Prom agreed that it would pay a contribution to Dominion's past costs on the license as well as its equity share of forward exploration costs including those of the two commitment wells, the first of which is Mihambia-1.
The approval of the Farm-In by the Government of the United Republic of Tanzania was given on November 17, 2008. On December 24, 2008, Maurel & Prom and Dominion OGL agreed to amend the Farm-in whereby Maurel & Prom have agreed to fund 100% of the costs associated with drilling Mihambia-1 and Dominion OGL will fund the entire costs associated with the second Mandawa commitment well, expected to be drilled later this year. As part of the amendment, the parties have agreed that, subject to the approval of the Government of the United Republic of Tanzania, the interests in any Development Licence issued as a result of a successful discovery in Mihambia-1 will be apportioned 55% to Maurel & Prom and 45% to Dominion OGL. The overall interests in the Mandawa PSA remain unchanged at 50% for each party.
Heritage Oil Limited, as operator of the Kisangire PSA has recently completed the acquisition of approximately 190 km of 2D seismic. Following interpretation of the seismic data, a decision will be made with regards to timing for the drilling of the first commitment well.
Block 7 PSA
Dominion is also participating, together with StatoilHydro, Petrobras, Petronas and Anadarko in a joint industry, one year Metocean study of waves and currents off the Tanzania and Mozambique coast.
Mike Garland, Chief Executive Officer of Dominion, said, "It's very exciting to be able to announce the spudding of our first well, which comes after a number of years of hard work from our employees and much patience from our investors. In addition, the preliminary results of the seismic analyses for Block 4B in Uganda and Block 7 in Tanzania are further reasons to expect extremely exciting times ahead for all involved with Dominion. Financing of our forward program is top of our agenda and I am confident that the quality of our asset base will enable us to secure funding when required."
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